I don't believe the idea was to make money at that time. It was to avoid a run on the banks and a repeat of 1929. I am not convinced the economy would have been better off. In those days you had pretty much one major bank failing every week.
That's not to say that there'll ever be enough evidence to prosecute that awareness, but the idea that they have no idea what goes on at lower levels, and that none of the 2nd/3rd line risk functions or Internal Audit did any work that would have uncovered that activity....
And that senior management, who were surely aware that it was now important, never thought about the risk of a rating based on trust being manipulated by people who would profit from that manipulation by receiving increased bonuses?
If all that's true, doesn't say a lot for all these very highly paid bank executives does it?
"Statistical analysis indicated that the Libor rose consistently on the first day of each month between 2000 and 2009 on the day that most adjustable-rate mortgages had as a change date on which new repayment rates would "reset". An email referenced in the lawsuit from the Barclay's settlement, showed a trader asking for a higher Libor rate because "We're getting killed on our three-month resets." During the analysed period, the Libor rate rose on average more than two basis points above the average on the first day of the month, and between 2007 and 2009, the Libor rate rose on average more than seven and one-half basis points above the average on the first day of the month."
Also from https://www.bloomberg.com/news/articles/2013-01-28/libor-lie...
"At Barclays, derivatives traders made 257 requests for U.S.-dollar Libor, yen Libor and euro interbank offered rate, or Euribor, submissions from January 2005 to June 2009, "
So whilst it may be true that it became more relevant after 2007, it seems be that there were some elements of this that were longer standing.
The problem was: how do you combat fear? The LIBOR submissions were pretty transparent and investors were using it as a way to guess which banks would be the next to fail. I guess the BoE either thought they needed a short term solution / didn't have the time or appetite to change the way LIBOR was submitted. Or they thought that if they were hidding individual bank submissions (which they ultimately did), it would only aggravate fear.