It’s Libor all the time, just not for me.
Earlier I blogged about how the Libor scandal just isn’t getting me as worked up as it is for other journalists (see Joe Nocera’s column today in the NYT). It’s not that I don’t think allegations of market manipulation aren’t important. And this is nothing to take away from the groundbreaking reporting by my Reuters colleague Carrick Mollenkamp did on the matter back in 2008 while he was at the WSJ.
It’s just that in the scheme of things, the allegation that bankers may have conspired to keep Libor artificially low to make their institutions seem more solvent during the height of the financial crisis doesn’t chill me to the bone. Did anyone really believe those institutions were solvent during the crisis? Does anyone really believe banks with hundreds of billions of second-liens on their books and other poorly reserved loans are really solvent today?
We simply say the banks (except for maybe some in the euro zone) are solvent and whistle past the graveyard.
And here’s the thing: we all know how this Libor thing will play out. A bunch of other banks will pay big fines, some other top executives will resign, politicians will hold hearings at which they will rant and rage, a few no-name bankers will go to jail and there will be talk about creating another loan benchmark that probably won’t be any less prone to potential abuse than Libor.
Oh, and the folks on Twitter will rage and pontificate too. But in the process I worry about all that we in the media miss while we get all worked up and go from one big scandal to and another. In the process we ignore the everyday financial crimes that rip-off ordinary people–whether it be lenders assessing unnecessary fees or hucksters pitching higher yielding funds and investment schemes.