LIBOR in Baltimore and the News; plus Matt Taibbi on LIBOR (video)

The LIBOR scandal isn’t going anywhere. In the literal sense, it isn’t going anywhere because it’s so wide-reaching and involves hundreds of trillions of dollars all over the world. LIBOR, the London Interbank Offered Rate, was purposely manipulated both upward and downward, resulting in obscene ill-gotten profits for many of the banks involved, while many cities and municipalities across the globe were adversely affected. The question of course is whether we will pay attention to it.

The city of Baltimore became one of the first to actually file a lawsuit against the banks earlier this summer, and now a growing number of towns and organizations are also getting in on the act as the implications of what has been happening begin to sink in:

Baltimore is lead plaintiff in a class action lawsuit that alleges that banks including Barclays, Bank of America, HSBC, JP Morgan and UBS conspired to fix a set of key interest rates – the London Interbank Offered Rate, or Libor – costing the city millions in the process. So far, the Libor scandal has played out mostly under the radar in the US. But now it is gaining traction in Washington, and Baltimore’s suit is putting a human face on a scandal legal experts predict could end up being the most costly of the credit crisis.

“It’s an enormous scandal; it eclipses anything we’ve seen since 2008,” said Matt Taibbi, appearing on Democracy Now in July. He calls it “the mother of all regulatory dilemmas….pretty much all of the banks have to be in on it to move the needle [the bank exchange rate] in any one direction.”

He continues: “So you’re talking about sixteen of the world’s biggest most powerful financial institutions, and if they’re all cooperating in what essentially is a gigantic international price-fixing operation, what do regulators do?”

The other concern with this crisis is of course where it is going figuratively. Is it going to be overwhelming to a glazed-over public unable to make heads or tails of both the wrongdoing and its widespread effects? Is it going to be too complex for the average citizen to wrap their head around or will it simply be met with resignation that ‘these things tend to happen and no one ever is held accountable’?

Unfortunately at this early stage, the American population isn’t getting the information it needs (surprise!). According to one prominent U.S. news watchdog organization, Media Matters, “No broadcast network covered LIBOR in their evening half-hour flagship programs between July 13 and July 28.” Another of their studies found that in the two weeks prior to that, when the story initially broke, the six major U.S. television news outlets only spent twelve minutes reporting on LIBOR in their evening news and opinion programming while devoting almost three full hours to the Cruise/Holmes divorce, shark sightings and chimpanzee attacks.

Baltimore city solicitor George Nilson says he thinks that U.S. interest in the case will grow as more people became aware of the scandal and/or Baltimore’s lawsuit. Part of that, of course, will be when some of the spotlight begins to hit U.S.-based banks. Right now the main focus in the European press has been on Barclays, Bank of Scotland and several of the European banks.

However, with Baltimore’s class action lawsuit targeting banks such as JP Morgan, BOA and others, the story is slowly being introduced states-side to a small but growing audience. It’s also beginning to illustrate the adverse effects that such complex financial arrangements can have on everyday communities.

From The Guardian’s article:

Firefighters, services for the elderly, school programmes – all these and more are being cut as a direct result of the actions of colluding bankers, Rawlings-Blake claims.


According to the court documents, Baltimore bought “tens of millions of dollars worth of interest-rate swaps” during the period when the alleged fixing took place. The suit… alleges that between August 2007 and May 2010 the defendants conspired to suppress Libor below the levels at which it would have been set had they accurately reported their borrowing costs. Those manipulations had “severe adverse consequences” for Baltimore and others, according to the suit. Other cities are watching carefully and a raft of litigation is expected in the US.

Despite the gradual realization to many of just how enormous the scandal might be, it remains relatively under the radar here in the states. And as we head into another presidential election fall campaign for the next ninety days, one can only wonder how much press it can get and how well it will be explained to a population more geared to be receptive to bite-sized talking points, celebrity gossip and the dangerous world of nature with its animal and weather attacks. Even with the economy being the major concern in most voters’ minds, it’s tough to say how much LIBOR will make its way into the public discussion.

Here’s hoping for more than just the usual. Maybe we’ll get lucky and find a few more reasoned minds who can actually put this scandal into plainspeak much the way Elizabeth Warren did several years ago in explaining the homeowner mortgage crisis and financial meltdown to the general public. The emergence of people like that who are willing to investigate and demystify the topic, combined with a more concerted effort by concerned citizens to spread this story around, might be all that the story needs to really get some legs under it. In the meantime, …-hey! is that a shark right behind you?!

3 thoughts on “LIBOR in Baltimore and the News; plus Matt Taibbi on LIBOR (video)

  1. Pingback: The Billionaire's Cap Series, part 1: When Is Enough Enough?

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