The Libor scandal is just another example of why big banks need to be broken up, according to Robert Reich.
In an appearance on HuffPost Live Wednesday to discuss the Libor scandal, the former U.S. Secretary of Labor slammed "too big to fail" banks, arguing that the rate-rigging shows how easy it is for them to cheat.
"The Libor scandal does show the ease with which these big banks can collude,” Reich said. “The big banks are too big, there’s too much collusion, they’re too big, they will inevitably fail and they’re 'too big to fail,' so they’re going to be bailed out again.”
Sixteen banks are being investigated over claims they rigged Libor, an interest rate banks to use to lend to one another and that affects everything from mortgages to small business loans. Barclays, the first bank to be implicated in the scandal, agreed to pay $450 million last month to settle claims of Libor fixing, and the bank’s CEO and other executives resigned in the wake of the scandal.
Although cable and network news outlets have largely ignored the Libor scandal, Reich, who has previously called it “insider trading on a gigantic scale,” noted that the Libor story is an important one for every American to understand.
“Let’s say you’ve got a mortgage," Reich said, "chances are because of this rigging, you probably paid more than you otherwise might have."
Here are the 16 banks that are under investigation over Libor rigging: