LIBOR is the London Interbank Offered Rate and is the basis on which all interest rates are set. Therefore, news that it was being manipulated is very concerning. LIBOR may be an obscure financial definition to many Americans but it impacts your wallet inso many ways. LIBOR is used by banks to establish mortgage rates, credit card rates, auto loans and much more.

One way to make sure that LIBOR manipulation doesn’t happen again is for regulators to take decisive action against those engaged in the practice.

It’s important to note that the Department of Justice (DOJ) and other regulators are examining this matter but too often when it comes to financial services misdeeds the only punishment is a fine that a financial institution can easily afford. It never goes any further than that. In order to change behavior, the consequences must be meaningful.

If authorities really want to end this perpetuating culture of abuse, fraud and manipulation on Wall Street, the DOJ needs to make more indictments, and U.S. banking regulators need to settle for bigger dollars. I recognize that government regulators don’t always have the resources to outlast private companies and settling cases means less money spent on litigating a case. Pursuing higher financial penalties from the outset will result in a more meaningful punishment and send a more powerful message.

News reports indicate there are pending charges of traders who engaged in this abusive behavior, and that is encouraging. However, unless CEOs and other top executives are also held accountable, Wall Street will just view these fines as parking tickets - minor penalties they can just work into the cost of doing business. Without a real threat, like one to a CEO’s reputation or to a firm’s stock price, this type of behavior will not change.

The publicized emails and instant messages related to the LIBOR scandal in which traders and bank employees wrote notes like “Who’s going to put my low fixings in? hehehe”  and “if you breathe a word of this I’m not telling you anything else” are troubling. Barclays CEO, Bob Diamond, actually sent emails and memos directing employees to manipulate the LIBOR. Given such obvious and hard evidence, it is hard for me or the average person to understand why more employees aren’t being held accountable for their blatant disregard for regulation. It is equally difficult to understand how a CEO like Bob Diamond could simply resign and keep more than $3 million on his way out the door.

Congress owes it to the public to do its best to stop rampant Wall Street fraud and rebuild confidence in our markets. The American people should feel completely comfortable that our markets are fair, reliable and not weighted against them. The hardworking people who struggle to save up for a home or pay for college tuition, the cities and towns that pay for firefighters and build roads, the pension funds that ensure we have something to retire on, they all depend on our financial system. We owe it to them to take stronger action.

Our financial system must have tough enforcement authorities in place to hold people accountable for their actions. This is critical if we want to deter others from similar behavior. However, if the proper regulatory tools are in place but there isn’t any money to implement them, they won’t be effective. Republicans have taken every opportunity to defund the agencies responsible for implementing the Wall Street reform bill. That is a problem. One cop alone can only do so much – that one officer needs information,equipment and backup to be truly effective. If Congress wants improvements to our financial system, regulators must be given adequate funding to do their jobs.

LIBOR manipulation is just the latest controversy. Until the DOJ and our banking regulators raise the bar when it comes to punishing those responsible, there will always be another banker ready to engage in risky and illegal behavior.

Capuano is a Democrat from Massachusetts.

Editor's note: Rep. Capuano issued this clarification to the charge that Barclays CEO Bob Diamond sent emails to employees directing them to manipulate the LIBOR. (8/15/12)

“Barclays contacted my office after this piece had been posted and stated their belief that Mr. Diamond did not tell anyone to manipulate. Since I am not privy to the entire ongoing investigation, I cannot make a final determination. However, I am happy to offer their differing opinion and hope Barclays is correct.”