Elizabeth Warren jumped into a growing chorus decrying the massive Libor manipulation on Thursday with a scathing editorial in the Washington Post.
“The Libor scandal is more than just the latest financial deception to come to light. It exposes a fraud that runs to the heart of our financial system,” writes Warren, a long-time Wall Street critic who is running for the U.S. Senate in Massachusetts.
“The Libor fraud exposes rot at the core of the financial system,” Warren writes.
Sixteen major banks, including Bank of America, JPMorgan Chase, and Citigroup, are under investigation for allegedly rigging the Libor, a benchmark interest rate that banks set and use to lend money to each other. It is the basis for hundreds of trillions of dollars’ worth of loans and derivatives and its manipulation possibly cost some cities and states millions of dollars.
Warren writes that the rate-rigging offers further proof that the whole financial system lacks integrity — possibly the first time Warren and Goldman Sachs CEO Lloyd Blankfein have ever publicly agreed on anything.
The journalist and outspoken Wall Street critic Matt Taibbi has also pointed out the far-reaching ramifications of the Libor manipulation, telling the news show “Democracy Now!” that “[e]ven the tiniest manipulation downward, when you’re talking about a thing of this scale, would result in tens of trillions of dollars of losses.”
While Barclays has so far borne the brunt of public wrath over the Libor scandal, evidence emerged this week that the American bank Citigroup may have in fact been the biggest interest-rate manipulator out of all the banks involved.