Everyone should be paying attention to the Libor scandal, at least according to Warren Buffett.
"It's a big deal," Buffett told CNBC "Squawk Box" host Becky Quick Thursday. "You get Libor, and you're talking about the whole world."
Big banks have come under fire following allegations that many profited off the manipulation of Libor, a key interbank lending rate that acts as a benchmark for interest rates around the world. The first bank to admit wrongdoing, Barclays, agreed to pay more than $450 million last month to settle claims it manipulated the rate. The 16 banks under investigation by governments in Europe, the U.S., and Japan for allegedly rigging Libor include Bank of America, JPMorgan Chase, and Citigroup.
Rolling Stone's Matt Taibbi recently said it was likely that most or all of these banks were guilty of rigging Libor, since 16 banks help set the Libor rate every day. On CNBC, Buffett called Libor "the base rate for the whole world."
"Everything is tied in [to Libor]," Buffett said. "The idea that a bunch of traders can start e-mailing each other or phoning each other and play around with that rate is an important thing, and it is not good for the system."
Buffett said that unwinding the collateral damage from the alleged Libor rate-rigging will not be easy because millions of contracts are based on Libor.
"It is a can of worms," he said.