Who Will Pay for the LIBOR Scandal?


So, you might have heard about this LIBOR scandal that is slowly but surely revealing the largest criminal enterprise in history.

Well, I was sort of looking forward to it coming to a head, because you know, I feel like the financial Lords of the Universe on Wall Street got a pretty darn good deal back when the feces entered the ventilation system in ’08. They got bailed out at the taxpayers’ expense. They got “made whole” without so much as a slap on the wrist. They got to continue making billions, while the average American got to sink or swim on empty promises of “change” and precious little else.

It was obvious at the time to most people, Fox News reporting notwithstanding, that the financial institutions had caused their own misery, as well as everyone else’s. But we were told that to let them all fall down would be the worst thing that could possibly happen. We had to save them, in spite of their bad, possibly illegal behavior. They were too big to fail. Sucks to be the rest of us, they are just too important to the economy of the world to let them lose that much money.

That tends to leave a bad aftertaste, if you know what I mean. I was looking forward to a little payback, on a universal, epic scale. But then I had a terrible idea.

An article in The Economist back on July 7th quotes one bank executive as saying that this is the banking industry’s “tobacco moment”, referring to the lawsuits that cost the tobacco industry over $200 billion back in 1998. The potential for fines and settlements for this fiasco is supposedly going to dwarf that by comparison.

Knowing what little the average citizen knows about where banks get the money they need to pay for their misdeeds, this thought makes me a little uncomfortable. Anecdotally speaking, it seems to come from taxpayers.

After all, the taxpayer picked up the tab from the collapse of 2008.

So, are we to believe that it won’t happen again? Is the federal government and a host of state Attorneys General going to be swooping in on these banks, followed, one would assume by another host of private pension plans and large investors? And, if this happens, is the money to pay these fines and settlements going to be in turn taken once again from the open window of the Federal Reserve?

Or are they too big to fail, but not too big to sue to death? If that is the case then why did we bail them out in the first place? Were they not yet evil enough? Where was the line between malfeasance that the taxpayer can be expected to cover and malfeasance that the Federal government prosecutes over? I think I missed that part.

I guess the question I’m leading up to is, if this is really the banking industry’s Tobacco Moment, and if there really are going to be massive settlements, and these institutions are still too big to fail, where is this money going to be coming from? From us?

Is this going to be another massive realignment of the nations treasure upward, this time to state and federal coffers and the nations largest institutional investors, again using the taxpayer as the nest egg of last resort, otherwise allowing everything to go on as before?

Don’t laugh, it could happen.

After all, it was taxpayer money, funneled into these massive criminal enterprises that allowed the charade to go on, unchecked by increased regulation, at a time when the sheer panic over circumstances could have forced the LIBOR manipulation scandal wide open. Billions of dollars in losses by average people could have been prevented. Billions more in undeserved profits and unwarranted salaries and bonuses could have been avoided. Still Billions more could have been used for propping up the real economy on Main Street, instead of the gambling house on Wall Street.

Imagine the positive domino effect of all of that money going places other than the gaping black hole of the largest criminal enterprise in history.

And make no mistake, dots were there that were not connected. Things were overlooked. Clues were left to lie in the open without investigation. It was even publicly reported in 2008 by none other than Timothy Geithner.

Where will the fortitude to see the Fed’s unsettling part of this thing investigated to its conclusion come from? Geithner’s caution in 2008 could have cost America trillions of dollars. He could well turn out to be the Joe Paterno of International Finance if he’s not careful. People are already asking questions about why he did nothing to stop what he must have known was happening.

He must have known, but he did nothing to stop it. Why he hasn’t already resigned at this point is a mystery to me. Mitt Romney is thanking his lucky rich man’s stars tonight, folks, and somewhere Karl Rove is licking his lips, because all of a sudden, they have an issue.

Show of hands, who thinks this will get resolved to any reasonable facsimile of justice? Who thinks we will ever know the truth? Who thinks the average person stands to be better off when this thing blows up?

Yeah, me neither. But do me a favor and call up the Whitehouse, just in case, and just because. Tell Obama that you don’t want this swept under the rug. Tell him you don’t want the lawsuits settled with your money. Remind him that the only way to keep Mitt Romney from beating him with this is to be more than evangelical in his pursuit of justice in the name of the American People, and finally, ask him to put on his super-hero cape, head over to Congress, and get something passed NOW that will give us all some sense that there is an adult somewhere watching over the financial industry who is concerned about integrity, honesty and putting an end to the largest freaking criminal enterprise in history.

The Whitehouse: 202-456-1111


  1. Tom Sullivan says:

    So drunk rich they’re bulletproof?

  2. Roger E. Hartley says:

    It’s funny that some tea parties are freaked about one world govt and sustainability, and what could have prevented this falls in the category of job killing regulation. NO new world order here..