An extremely interesting article in Bloomberg explains:
The 2007 credit crunch increased the opportunity to cheat. With banks hoarding cash and not lending to one another, there was little trading in money markets, making it difficult for rate setters to assess borrowing costs accurately. Instead, traders say they resorted to seeking input from brokers, colleagues and acquaintances at other firms, many of whom stood to benefit from helping to push the rate in a particular direction.
This article reinforces many of the points I made in my piece “The Financial Fish Rots from the Top Down.”