The Deep Back Story of Liborgate » Counterpunch: Tells the Facts, Names the Names
"In the last four years costly interest rate swaps have become a focus of community activists and public sector unions who have watched as literally hundreds of millions, perhaps billions have been drained from the public sector. Until recently activists trying to address this crisis have been pressuring elected officials and banks, using the logic that it was the Federal Reserve’s reduction of rates that caused most swaps to turn toxic. However, because Libor is the key rate with which the majority of interest rate swap payments are calculated today, the Libor scandal has reinvigorated and transformed the moral and legal arguments that can be used by local governments seeking exits from toxic swaps. Any manipulation of Libor rates since 2007 means that swap counterparty payments linked to hundreds of trillions in public debts have been distorted, potentially to the detriment of the public, all of this on top of the already unjust depression of rates caused by the Fed. Even the stolid Financial Times has made note of this, saying that local governments burned by swaps and seeking an exit “have a point,” and that “A groundswell of such resistance should worry other banks"."
