- Cleveland Fed Economist Guhan Venkatu looked at data from the Mortgage Bankers Association and Lender Processing Services and found that 80% of subprime adjustable-rate mortgages are tied to the London Interbank Overnight Rates (LIBOR) and 45% of prime ARMs.
- News came out last week that Barclays Bank had manipulated LIBOR.
- Subprimes were about 80% linked to LIBOR in 2000 and almost completely by 2008, Venkatu found.
From the article:
A large percentage of mortgages are tied to the now shaky Libor rate banks charge to borrow from each other, according the Federal Reserve Bank of Cleveland.
