Jeff Greenfield, a veteran political, media and culture reporter and analyst, has spent more than thirty years on network television. He currently hosts PBS' "Need To Know." From 2007-11, he served as CBS Senior Political Correspondent.
Prior to his return to CBS News, Greenfield had been senior analyst for CNN since 1998. During that time, he served as its lead analyst for its coverage of the primaries, conventions, presidential debates and election nights, as well as presidential funerals and Supreme Court confirmation hearings. Greenfield also has reported on the media,culture and trends for the cable network.
Will the LIBOR Scandal Jump the Atlantic?
Monday, July 09, 2012 - 08:35 AM
It's big news in Europe right now. Monday morning, before a British Parliamentary committee, a top official with the Bank of England is testifying.
But will it hop the Atlantic and take root here at home?
"It" is the news that Barclays – and perhaps other big banks as well – were playing fast and loose with the rules of the road that govern "LIBOR" or the London Inter-Bank Offered Rate, that affects everything from adjustable mortgage rates to car loans. Barclays has already paid some $450 million to settle charges, and the bank's chairman and CEO have walked the plank.
It's a huge, complicated story: was Barclays fudging the numbers to fatten its profits? To prevent widespread panic during the financial crisis of five years ago? Both – and that's why I'm skeptical that this story will really rivet the attention of the broader public. When it comes to financial scandal, it's much easier to stir interest – and, especially, indignation – if the story involves numbers small enough for us to grasp.
Consider the recent outrage over the antics of the General Services Administration, which "won" huge attention for a Las Vegas retreat it put on back in 2010. The total cost of the event: $823.000, which amounts to the cost of running the government for, oh, a gazillionth of a second. What stirred the outage (apart from the fact that a government agency went to Vegas, rather than, say, Muncie, Indiana)? The details: $400 for rented tuxedos! $3,749 for T-shirts! $95 a person for a reception and dinner! $57.72 per person for lunch!
With numbers like this, a story descends from the high altitudes, and comes down to earth. When I'm told that LIBOR affects as much as $800 trillion in transactions, I simply do not know how to grasp that kind of impact. I need a number that I've had some remote relationship to in my life. That's why when one-time Tyco International CEO Dennis Kozlowski involuntarily entered the public spotlight, the key fact involved not financial wrongdoing, but the fact that he had a $6,000 shower curtain for his 13-room Fifth Avenue duplex.
That's why the public outrage over Defense Department spending in the 1980s involved not tens of billions of dollars in weaponry that did not work, but $700 toilet seats.
So if the LIBOR story is going to become a major, headline-grabbing story on this side of the Atlantic, the financial journalists need to stop trying to figure out how much – if anything – these alleged interest-rate shenanigans cost investors or customers.
What they really need to find out is whether the Barclay's folks ordered in a $150 per person lunch – preferably with a nice Sancerre or Chardonnay – and wrote it off.
That's a story we can sink our teeth into.