On the Current TV show Viewpoint with Eliot Spitzer, Rolling Stone contributing editor Matt Taibbi said that the underreported Libor scandal was the “the biggest story, Wall Street-related story, of this year.”
“There’s been a whole spate of market manipulation-type cases that have popped up in the last year, not just with interest rates or Libor but all kinds of places. There are hedge fund cases, there’s auction rigging cases,” he said. “But the Libor case is kind of symbolic of the worst of those. And this is — if it’s true that the 16 biggest banks in the world were fixing global interest rates, then it’s hard not to argue that that’s not the biggest financial corruption case in history. Because the, almost every kind of financial product would be affected by that. It hasn’t gotten the press that maybe it should have in the United States yet, but it’s largely because people don’t understand it.”
Libor stands for London Interbank Offered Rate. According to CNN, “Libor is a collection of rates generated for various currencies across 15 different time periods. The quotes are then used as benchmarks for roughly $10 trillion in loans and some $350 trillion in derivatives.”
Taibbi said the government has indicated there will be at least one prosecution, whether a civil lawsuit or criminal prosecution, and that it is difficult to imagine that only three big banks — the ones who have already admitted wrongdoing — were involved. The scale of coordination would likely only work if the biggest 16 were party to the scheme, he said.
“I fully expect that we’ll find out in the end that American banks were involved in this scandal,” Taibbi said.
This month, the Swiss bank USB was ordered to pay $1.5 billion to governments in the U.S., the United Kingdom and Switzerland. The U.S. is also seeking to extradite two USB traders who have been charged with conspiracy and wire fraud, reported CNN.