Big banks that rigged interest rates behaved in "brazen, flagrant" fashion, the head of the Commodities and Futures Trading Commission told CNBC on Wednesday, adding that imposing hefty fines were needed as a deterrent to bad behavior.
In the wake of disclosures that Royal Bank of Scotland would be fined $627 million by regulators in the U.K. for global interest-rate rigging, Bart Chilton, the CFTC Commissioner, called for a "culture shift" as part of an effort to rein in improprieties at large financial institutions.
"They were really acting like they were flying above the law in arrogant fashion," Chilton said on " Squawk Box ." He said the stiff penalties levied against RBS showed that regulators were serious about cleaning up financial markets.
"If you violate the law, you should be punished. The law is the law," the CFTC chief said. "That's why these penalties, like this one, over $600 million are so important. It sends a serious and significant message: don't mess with markets."
After the 2008 crisis, major global banks such Royal Bank of Scotland, UBS and Barclays found themselves at the center of accusations that they had manipulated the London interbank offered rate (Libor) . The rate is used to calculate numerous financial instruments, including credit cards and mortgage rates.
"With UBS and RBS, theirsubmissions were actually included and they did manipulate [Libor]," Chilton said. "We call it perfected manipulation.Not only did they try to manipulate, they had a perfected manipulation."