The London Interbank Offered Rate is one good measure of the credit crisis: It’s the interest rate that good, steady banks can expect to pay when borrowing from each other. The further it gets from the Fed rate, the worse things are. The LIBOR gets set every day by the British Bankers’ Association in London. As banks grow more unwilling to lend each other money — because who knows if they’ll get it back — the LIBOR climbs further from the steady U.S. Fed rate, making it more and more difficult for banks to get money on credit.

Scott Lamb
posted about 3 years ago

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