patrick.net

http://www.rollingstone.com/politics/news/taibbi-is-libor-crucial-financial-benchmark-a-lie-w497305

The LIBOR scandal of a few years ago came about when it was discovered that the banks were intentionally lying about these estimates. In some cases, they were doing it with the assent of regulators.

In the most infamous instance, the Bank of England appeared to encourage Barclays to lower its LIBOR submissions, as a way to quell panic after the 2008 crash.

It later came out that banks had not only lied about their numbers during the crisis to make the financial system look safer, but had been doing it generally just to rip people off, pushing the number to and fro to help their other bets pay off.

Written exchanges between bank employees revealed hilariously monstrous activity, with traders promising champagne and sushi and even sex to LIBOR submitters if they fudged numbers.

..

Think about this. Millions of people have been taking out mortgages and credit cards and auto loans, and countless towns and municipalities have all been buying swaps and other derivatives, all based on a promise buried in the fine print that the rate they will pay is based on reality.

Since we now know those rates are not based on reality – there isn't a funding market – that means hundreds of trillions of dollars of transactions have been based upon a fraud. Some canny law firm somewhere is going to figure this out, sooner rather than later, and devise the world's largest and most lucrative class-action lawsuit: Earth v. Banks.