Fannie Mae and Freddie may have lost more than $3 billion because of LIBOR manipulation between 2008 and 2010, according to an internal Federal Housing Finance Agency report obtained by the Wall Street Journal.

The FHFA report encourages the GSEs to consider taking legal action against the banks responsible.

Its a reminder why this scandal is so mind-blowing. No one is sure how deep this rabbit hole goes, so to speak, in terms of money or players involved. According to a Reuters report on a $1.5 billion fine doled out to UBS today, the LIBOR rigging probe involves “over a dozen banks.” About $800 trillion worth of financial instruments are affected by the rate.

In a July Economist report on the scandal, a CEO of a multinational bank described it as “the banking industry’s tobacco moment,” referring to the litigation and settlements that ended up costing tobacco companies’ $200 billion. After last week, one can’t but help see the parallels between LIBOR and the Sandy Hook shooting, in moral terms. Just as a previously unimaginable tragedy is forcing America to deal with gun control, a previously unfathomable theft might force the world to deal with global finance’s larcenous business model.

The judicial system might effectively do what legislators and regulators seem unwilling to do: break up the big banks.

Our ideas can save democracy... But we need your help! Donate Now!

Samuel Knight is a freelance journalist living in DC and a former intern at the Washington Monthly.