August 11, 2012
News Networks Ignore a Major Banking Scandal
by Robert Kropp
The Interfaith Center on Corporate Responsibility writes to ABC and NBC, asserting that the
networks have failed to cover the LIBOR rate-fixing scandal and its severe impacts on the poor and
It may be that a narrative on the interest rates that 18 of the world's largest banks—including,
from the US, Bank of America, Citibank, and JP Morgan Chase—charge each other is considered too
abstract to hold the public's interest. Or it may well be that the public perception of banking
ethics has, since the fiscal crisis of 2008, plunged to such depths that the London InterBank
Offered Rate (LIBOR) rate-fixing scandal is seen as yet another example of business as usual.
But as a handy graphic points
out, LIBOR functions as the global benchmark for $800 trillion in financial instruments, and
the scandal—for which the UK-based Barclay's Bank has already agreed to pay $453 million in fines
for manipulating the rate—has implications that extend beyond advantageous trading positions or a
false presentation of banking fiscal health.
In the US, the City of Baltimore filed a class-action lawsuit against the LIBOR banks,
charging that "Defendants' manipulation of LIBOR allowed them to pay unduly low interest rates to
investors, including Baltimore Plaintiffs, on LIBOR-based financial instruments during the Class
"Baltimore purchased hundreds of millions of dollars in interest rate swaps
directly from at least one Defendant in which the rate of return was tied to LIBOR and was injured
as a result of Defendants' anticompetitive conduct," the complaint continued.
Oakland, the Oakland Coalition to
Stop Goldman Sachs and other community groups have launched a campaign to prevent the bank from
entering into contracts with the city in the future, unless it agrees to amend an interest rate
swap that is costing the cash-strapped city $5 million a year.
Rev. Seamus Finn of the Interfaith Center on Corporate Responsibility
(ICCR) told SocialFunds.com that with many more city and state governments throughout the US in
the midst of budget crises, and with insufficient funds in the federal budget to help allay those
crises, the impact of the rate-fixing scandal is profound.
Yet viewers of evening news
programs on national networks may well be unaware of it. This week, ICCR sent letters to the news
producers at ABC and NBC, protesting what the organization calls "the complete absence of media
coverage…on one of the biggest banking scandals of our time: The manipulation of the LIBOR, a
critical bank setting interest rate that affects payments for more than 800 trillion dollars of
As the letters point out, a report from Media Matters surveyed network news coverage of the scandal in the days after it broke.
"Between June 27 and July 12," the media watchdog group reported, "CNN devoted almost five minutes
to the scandal." MSNBC devoted two news briefs, totaling about half a minute, to it.
Evening News was the first network to run a full-length segment on the scandal, Media Matters
found, and followed with a second segment devoted to Baltimore's lawsuit.
As for ABC World
News and NBC Nightly News? Not a single mention from either during the entire two-week period.
Overall, Media Matters concluded, "American television news outlets…are practically
ignoring the scandal."
Midway through the two-week period covered by the Media Matters
report, Matt Taibbi wrote at Rolling Stone, "This story is so outrageous that it shocks
even the most cynical Wall Street observers."
"The implications…should be particularly
chilling to Americans, who in recent years have been party to a number of revelations about strange
and seemingly inappropriate contacts between senior regulatory officials and big bankers during the
heat of the crisis," Taibbi wrote.
In its letters, ICCR stated, "The manipulation of these
rates affects people across the income spectrum. As faith-based organizations we must stress that
this corruption has severe repercussions for the poor and most vulnerable."
requested that the news programs "immediately start to cover these banking scandals and their
impact on average Americans and poor people around the world."
As Finn pointed out to
SocialFunds.com, ICCR members have a long history of engagement with financial institutions on
practices that have implications for social justice. In 2010, ICCR members filed shareowner
resolutions at four major financial institutions, requesting that the banks' collateral for
derivatives trading not be rehypothecated.
Rehypothecation refers to the practice by
financial institutions of taking in collateral as guarantees on derivatives trades, and then using
it as collateral for their own transactions.
And last year, ICCR members engaged with
banks on repurchase agreements, requesting greater transparency for a market in which the
interdependence of banks raises similar risks to those in the derivatives market.