The EU has searched perhaps 10 major banks looking for evidence of price-fixing. The European Commission said it was specifically concerned that banks might be manipulating the Euribor, a key base rate in Europe that derives from interest rates set by most of the European banking giants. Anyone who could manipulate the Euribor could make a fortune by trading in derivatives whose value follows the Euribor. However, the Euribor aside, any system by which banks disclosed their interest rate changes to each other before making them public would be a serious concern and a cause for criminal indictments and regulatory penalties.
What is more significant is the change in regulatory tone that the action may imply. Up until now, regulators in both Europe and the United States have taken a hands-off approach to the banking giants, almost as if they were regulating nuclear power stations. This new series of raids is anything but hands-off and may, we can hope, hint at a new regulatory approach in which the banking giants will be expected to follow banking laws just as closely as all other banks do.