Matt Taibbi called out CNBC anchor Larry Kudlow for claiming that banks' rigging of a key interest rate did not hurt anyone.
"I can’t imagine how he [Kudlow] could possibly -- a sane person could possibly -- describe this as a victimless crime," Taibbi told "Democracy Now!" on Thursday. "Even the tiniest manipulation downward, when you’re talking about a thing of this scale, would result in tens of trillions of dollars of losses."
"It's an enormous scandal," said Taibbi, the Rolling Stone contributing editor who infamously dubbed Goldman Sachs the vampire squid. "It eclipses anything we've seen since 2008."
Sixteen major banks, including Bank of America, JPMorgan Chase, and Citigroup, are under investigation for allegedly rigging the Libor, a benchmark interest rate that banks set and use to lend money to each other. It is the basis for hundreds of trillions of dollars' worth of loans and derivatives and its manipulation possibly cost some cities and states millions of dollars.
Taibbi said in the "Democracy Now!" interview that ordinary Americans are victims of the Libor scandal because lower interest rates probably contributed to forcing state and local governments to slash spending.
"If you live in a town that had a budget crisis, that had to lay off firemen or teachers or policemen, or couldn’t provide services or textbooks in their schools, you know, that might be due to this," Taibbi said. "Basically, every city and town in America, to say nothing of the rest of the world, has investments that are pegged to Libor."
Kudlow dismissed the Libor scandal on his CNBC show on Tuesday, claiming that when banks manipulated Libor lower, those reduced rates benefited ordinary people.
"All those mortgages, I happen to have one, that float against Libor, benefited. Homeowners benefited. I daresay probably state and local governments benefited," Kudlow said.
Kudlow even said that Barclays, which agreed to pay more than $450 million last month to settle charges that it had rigged the Libor rate, was the victim.
"Maybe you're right, the victim was the lender, that was Barclays," Kudlow said. "The Justice Department says this could be a criminal prosecution. I don't get that. Who are the victims? Who are the victims?"
Taibbi acknowledged that Americans "probably benefited" on their mortgages and credit cards when banks manipulated the Libor rate downward. But even then, banks sometimes manipulated Libor upward "to capitalize on particular trades," which would have made some interest rates higher than they should have been, Taibbi said.
Here are 16 banks involved in the Libor scandal:
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