I had a long post written on the Libor manipulation scandal which is breaking, primarily in the UK, but WordPress ate it. For background, read Yves Smith at Naked Capitalism or Matt Taibbi at Rolling Stone. The good news is that this is starting to become a massive scandal in Britain, which could migrate across the pond over here.

If you’re wondering why banks colluding to manipulate Libor rates a few fractions of a percent is important, Duncan Black explains:

I don’t think it’s hyperbole to describe the LIBOR manipulation as theft at an almost unimaginable scale. One issue with too big banks, a too big banking system, and generally asleep regulators, is that the amount of money to be made by shifting any key rates by even a tiny unnoticeable amount is huge. A teensy percentage of a trillion dollars is still big money.

The costs to municipal governments in the US is likely in the hundreds of billions of dollars lost, if not more. Actual accountability for this crime would be lots of people going to jail and the banks responsible being levied fines so large as to bankrupt them, which would presage breaking up those banks and getting past Too Big To Hold Accountable. I won’t hold my breath that this happens, though.