A surprising unity of right and left seems to be forming around the news that American regulators were fully informed of fraudulent LIBOR rates as early as 2007, and chose to do nothing to protect American borrowers, states or localities. The cost to the American people is unknowable; the additional instability brought on by added mistrust of the banking system, and suspicion that the "regulators" are complicit in ongoing fraud and thievery, could produce additional unknowable costs.
The usual response from the left on this kind of issue is for greater regulation, but here the regulation has demonstrably done nothing to fix the problem. It's not that they weren't aware, it's that they knew and gave a pass to their buddies.
The guy who was the head of the NY Fed at that time, by the way, is now our Secretary of the Treasury, one Timothy Geithner: the same Timothy Geithner who became Secretary of the Treasury even though he had massive unpaid taxes; indeed, the same Timothy Geithner who was allowed to pay back the money without penalties by the IRS (try that if you own a small business like, say, the Dawsonville Pool Room). In other words, when he was caught, he was extended the same kind of look-the-other-way courtesy that he extended to the London bankers.
In both cases, the loser was the American people. Who were the winners? What can we say about them, and what ought we to do about them?