The impact of the rate-rigging scandal

Before this week you may never have heard of Libor. But thanks to the actions of a 322-year-old British banking institution it has been all over the headlines, and for all the wrong reasons.

This week on Counting the Cost we are focusing on Barclays, which in the space of a few days lost its CEO, its chairman – and perhaps its reputation too – after British and US regulators fined it $453m for manipulating the Libor rate.

Libor stands for stands for London Inter Bank Offered Rate and it is a measure of how much banks have to pay to borrow from their rivals and it is worked out every day from estimates submitted by the major banks of their own interbank lending costs.

The price of financial transactions worth trillions of dollars that are made every day around the world are set according to Libor. Mortgage rates are also linked to Libor. In fact, Britain’s housing minister believes the scandal may have even contributed to families losing their homes after the credit crunch.

We speak to Tony Greenham, the head of finance at the New Economics Foundation, who tells us what the interest rates scandal means for the banks and the people on the street.

Also on Counting the Cost: Laura Kyle is reporting on Burkina Faso’s Gold rush. The African nation is in the grip of a regional drought and while a poor harvest and rising food prices are leaving millions hungry, heavy foreign investment has prompted a resurgence in the country’s gold mining industry. And worse still, thousands of those affected by the drought – including children – are now working in illegal pits that have sprung up on the edge of official mines.

We are also looking at Mexico’s elections, and leaving aside the dispute over the vote, there is a new face to watch at the top. Enrique Pena Nieto, Mexico’s new leader, tells us how he plans to shake up the Mexican economy.