Time 9:09

Market Comments: Following the LIBOR story...

WSJ reports the troubles of banks in Europe are pushing up an interest rate widely used in the U.S., prompting the idea of a U.S.-based alternative to that rate, known as the London interbank offered rate, or Libor. The problem: Payments on trillions of dollars in U.S. corporate and mortgage loans are set according to dollar Libor, but only three of the 16 banks that contribute their borrowing costs to calculate the rate are based in the U.S. That means the financial difficulties of European banks are having an outsized effect on U.S. borrowing costs, and could complicate the Federal Reserve's efforts to bring those borrowing costs down. European banks' "demand for dollar funding is likely to raise dollar Libor and result in higher borrowing costs for everyone from [General Electric Co.] to the average homeowner, even as the Fed is lowering the fed-funds rate further," says Scott Peng, an interest-rate strategist at Citigroup.