What is the ‘Interest Rate Swap Scandal’
The scandal is that interest rate swaps were SOLD to small businesses by high street banks without any risk warnings, in the main the high breakage costs of the loans. When interest rates fell to record lows in 2008, coupled with an economic downturn, many small businesses with these loans were unable to refinance elsewhere because of the high cost of breaking the loans. Many businesses subsequently failed and had their assets seized by the banks.
lack of disclosure by the banks. Many small businesses were sold these loans aggressively by the banks who apparently earned huge commissions often as much as 5% of the loan value.