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In the world of high finance, it looks like hell has frozen over. Three British nationals working in the UK were recently arrested following an investigation into their involvement in the Libor scandal.

The London interbank offered rate (Libor) is used primarily as the interest rate banks charge one another for loans. Because interbank lending is the foundation for the cost of lending to consumers, Libor is also used as a benchmark for a multitude of financial dealings, including the adjustable rate mortgage (ARM).

Barclays was fined $435 million this July for its involvement in the scandal. As many as 16 other banks, including the big boys in America, remain under scrutiny.

The three arrests this week mark the first criminal action to be taken against individuals involved in the Libor debacle.

Related article:

Libor and you — a match made in . . .

first tuesday insight

Journalist Matt Taibbi calls it griftopia: a fantastical land where bankers and financiers perpetrate heinous crimes, grifting innocents out of their homes, and walk away with total impunity.

Some have said the reason why the titans of finance have not been held personally liable is a matter of market stability. Just as the banks are too big to fail, the individual bankers are too big to jail.

Another possible reason for the failure to prosecute has to do with corporate personhood. Modern corporate law was designed to protect the assets of individual owners of corporations. The design was thought to encourage business development and risk-taking in our society.

Unfortunately, asset protection has turned into cover-your-ass protection ­— in an effort to encourage risk taking, the law has allowed those risks to become criminal without holding any one person accountable.

Related article:

U.S. sues BofA for reckless lending scheme

That is, it seems, until now? We are dubious for two reasons: the identities of those arrested for their connection to the Libor scandal have been suppressed. In other words, the powers that be are not making an example of anyone here. Second, the arrests occurred under the jurisdiction of the UK authorities.

We’ll believe the tides are turning in the direction of American financial justice when Brian Moynihan or Jamie Dimon are hauled off to the stocks. The deterrent factor is real; criminal prosecution of bad actors is good for the markets. Some have suggested bringing back the guillotine . . .

Re: UK authorities arrest 3 in Libor rate manipulation investigation