I know it's a long read and a bit complicated.

Libor Scandal Could Turn 'Ugly' As U.S. Cities Begin To Sue

"The news on Wednesday that cities and states are suing some of the world's largest banks over Libor manipulation shows how this scandal could blow up into one of history's biggest bank frauds.

That's because interest-rate manipulation might well have kept your town or state from hiring firefighters or teachers, from paving roads or paying for indigent care or after-school programs for your kids -- adding to the human suffering of the economic collapse these same banks caused in the first place.
If it's any consolation, the lawsuits and fines over this manipulation could potentially cost the banks -- which include not only Barclays but Bank of America, JPMorgan Chase, Citigroup, and many more -- billions of dollars.
"This could get very ugly in a hurry for some banks," Peter Tchir of TF Market Advisors wrote in a note.

And this could finally be enough to make Americans stop reacting to the Libor scandal with "a shrug," as Joe Nocera recently put it, and push them closer to believing what Robert Shapiro, founder of economic advisory firm Sonecon, calls possibly "the biggest financial fraud in history." ...

If the banks were responsible for moving the three-month Libor rate by just 1/100th of a percentage point on that entire universe of $800 trillion in notional derivatives contracts, then that would be worth $20 billion, according to Tchir's calculations.

Banks are probably not going to be on the hook for derivatives worth anything close to that $800 trillion. But if banks manipulated rates by more than that 1/100th of a point, or for more than 90 days -- the term of three-month Libor -- on even smaller notional derivative amounts, then the numbers can still get big in a hurry. And that doesn't even include punitive damages. And it doesn't include the estimated $10 trillion in mortgages and other loans tied to Libor, including $275 billion worth of U.S. mortgages, according to an estimate from the Office of the Comptroller of the Currency referenced in the FT.

"That is the real exposure a bank caught 'lying' faces," Tchir writes. "If the lie was big enough and for a long enough period and anyone entitled to receive payment based on LIBOR can make the claim, the potential damage to the bank is enormous." "