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Libor: Under the radar, ever so slightly

Whether any class of people was systematically damaged by this seems unlikely to me since the manipulation went in both directions at various times, but by the same token huge numbers of people and institutions around the world will have lost money due to this. (Matthew Yglesis in Slate)

“It could make Bernie Madoff look like a shoplifter! More important, it could be affecting YOU!” (Stacey Johnson, Money Talks News)


Testy Business Copy Editor Phillip BlanchardHow can a story like the manipulation of the London Interbank Offered Rate (a genuine “unfolding scandal”) capture the attention of a general readership?

New York magazine Libor headlineIt really can’t. Absent the involvement of hookers or drugs, the Libor (or LIBOR, according to Associated Press style) case is a hard sell. It’s easy to imagine a business editor pitching the story for Page One while the other editors at the news meeting roll their eyes.

The temptation to “dumb down” the story is strong, but it’s not easy to do. The story doesn’t lend itself to “clever” headlines, as New York magazine proved.  There’s not even a catchall phrase to describe Libor, like the throwaway description of derivatives as “complex financial instruments.” It’s not useful to try the “how does this affect you?” approach, because, to the degree Libor affects everyday life at all, the manipulation could have benefited Mr. and Mrs. Main Street (lower interest on loans) even as it forced governments to sell bonds at artificially lowered rates.

Many publications run “primers” on Libor. The one published by The American,  the magazine of the “nonpartisan” but decidedly pro-capitalist American Enterprise Institute, barely qualifies as a “primer”; a better description might be “a short introduction.” The New York Times ran a “Q. and A.” (Who’s asking? Who’s answering?) that falls just short of dumbing down. The Globe and Mail’s primer is a bit confusing when it addresses the possible effect of Libor manipulation on consumer loans, but it nails the bottom line: “The abuse of Libor undermines confidence in the financial system, and makes big-money investors wary of dealing with banks.”  That’s what it’s all about: confidence in the financial system, which isn’t all that strong these days anyhow.

This scandal will be with us for a good long time. Interest will ebb and flow, depending on such factors as whether criminal charges are filed (seems unlikely) or governments fall (also unlikely, but less so). Meanwhile, we have to keep it covered.

The Times and its fellows will do that.  Smaller papers mostly will depend on the wires, but also will be tempted to get the “local angle” by interviewing, say, a bank manager or an economics teacher at the community college. Try to stop this before it gets too far.

Don’t worry about how prominently your Libor stories are presented. The important thing is to run them somewhere.

Meanwhile, a young editor would do well to become the house expert on Libor.  It’s complicated, but not that complicated. Becoming the go-to person on an esoteric subject like Libor just might get you promoted.

In Featured, Investing | Banking, Phillip Blanchard.

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