I wonder how long it will be before Barclays finds itself facing litigation over its LIBOR fixing scam. The US is a nation of enterprising, hungry and ruthless lawyers who must now look upon Barclays rather like a pack of hyenas gaze upon a sickly wilder-beast. The sweet smell of blood is wafting across the Savannah.....
As we have all learned over the last few days that LIBOR is the key interest rate that determines pricing in the derivatives market. Since Barclays fixed the LIBOR for its own interests, it must also follow that many participants in the derivatives market lost money.
Moreover, it can't be that difficult to prove it. Simply dust down that old derivatives contract, look at the date, check what the price would have been if LIBOR had not been manipulated. If any money was lost, then simply hire a lawyer, and file a suit against Barclays. What could be simpler?
Barclays have already conceded that they fixed the market.Frankly, the bank will find it difficult to mount any kind of serious defence in court.
Now here is the rub; the derivatives market is huge. It is measured in hundreds of trillions of dollars. There must be billions of dollars worth of losses related to this LIBOR issue. Does Barclays have the balance sheet to suck up the inevitable costs that will come from a series of massive and seemingly legitimate lawsuits.
Barclays could end up looking like Arthur Andersen after the Enron collapse.