Major American television news outlets are devoting scant coverage to one of the largest banking scandals in history. Regulators are investigating whether major financial institutions have been manipulating the LIBOR, a key interest rate that banks use to borrow money from one another. The British multinational financial institution Barclays has already been fined $450 million for its role in the scandal. Despite the massive scope of the controversy -- LIBOR is “used as a benchmark to set payments on about $800 trillion worth of financial instruments” -- CNN, Fox News, MSNBC, ABC, CBS, and NBC have only spent about 12 minutes combined covering the story during their evening newscasts and opinion programming.
Notably, flagship nightly news programs like ABC's World News with Diane Sawyer, NBC's Nightly News with Brian Williams and Fox News' Special Report with Bret Baier have never mentioned the rate-fixing scandal. Sunday morning standards including ABC's This Week with George Stephanopoulos, CBS' Face the Nation, CNN's State of the Union with Candy Crowley, and Fox's Fox News Sunday with Chris Wallace have also been silent on the story.
On MSNBC's Up with Chris Hayes this past weekend, host Chris Hayes observed that the rate-manipulation story has been “getting tremendous coverage” in England and in the financial press but “hasn't been sufficiently covered here.” His segment, which is notable as the longest and most in-depth coverage of the story on any of the programs included in this study, featured a panel discussion that included two economists.
Hayes is right: American television news outlets, including his own, are practically ignoring the scandal.
What happened? On June 27, news broke that the British Financial Services Authority, the U.S. Department of Justice, and the U.S. Commodity Futures Trading Commission fined British multinational bank Barclays $450 million in total for its role in trying to rig the LIBOR (the London Interbank Offered Rate).
Associate professor of finance at Georgetown University James J. Angel explains that this is the rate that banks use to borrow money from one another. The figure comes from a survey overseen each morning by the British Bankers Association, which asks members, in Angel's words, “If you were to borrow money this morning at 11 a.m. London time, what you would have to pay for it?” Thomson Reuters then calculates the LIBOR by removing the bottom quarter and top quarter extremes and averaging the rest of the estimates.
As The Economist reports, in recent weeks, “damning evidence has emerged, in documents detailing a settlement between Barclays and regulators in America and Britain, that employees at the bank and at several other unnamed banks tried to rig the number time and again over a period of at least five years.” Barclays and other banks have allegedly been manipulating the rate both to increase their own profits and give a misleading picture of their financial health.
Why is the LIBOR significant? According to Rosa M. Abrantes-Metz, an economist at Global Economics Group and an adjunct associate professor at New York University School of Business, it is the “most important rate of the last decade” :
It's the standard rate of computing an interest rate in all the major currencies and in many different maturities. It is set in about 10 currencies, and for each one there is one, three, six, and 12 month maturity with many in between. It's daily and very convenient.
The rate affects about $800 trillion dollars of contracts and all sorts if financial instruments globally. That's more than half of the whole derivatives market.
Who else may be involved? The LIBOR-rigging was likely not limited to Barclays. The Economist reports that “as many as 20 big banks have been named in various investigations for lawsuits alleging that LIBOR was rigged.” These include U.S. banks, such as JP Morgan Chase, Bank of America, and Citigroup; German financial institution Deutsche Bank; the United Kingdom's HSBC; and Royal Bank of Scotland.
How does all of this affect the average American? The LIBOR, as The Boston Globe reports, not only determines “lending rates for trillions of dollars of credit, from loans between financial institutions to credit cards and adjustable-rate mortgages” but also impacts local government agencies and municipalities that have financial investments directly tied to LIBOR.
In a federal lawsuit filed by Baltimore City against the banks that set LIBOR, the city argues that artificially low LIBOR denied it millions of dollars in returns on investments. As a result, Baltimore alleges that the city was forced to make service and payroll cuts during the recent financial crisis. According to the Globe, “dozens of states, cities, and other government entities are exploring whether they lost money” due to the rate-fixing scandal.
In a post pondering the lack of outrage stateside regarding the scandal, Rolling Stone contributing editor Matt Taibbi explained that the “story is so outrageous that it shocks even the most cynical Wall Street observers.” Indeed, numerous economists and economic observers have been quick to label this one of the largest banking scandals in history, with MIT professor of finance Andrew Lo telling CNN Money that it “dwarfs by orders of magnitude any financial scams in the history of markets.” The Economist quoted an anonymous “chief executive of a multinational bank” who called the story “the banking industry's tobacco moment.”
But most American television news outlets haven't taken enough time to explain the story to their viewers.
Between June 27 and July 12, broadcast and cable news' primetime newscasts and opinion programs offered meager coverage of the ongoing scandal.
CNN devoted almost five minutes to the scandal, which includes five segments and one passing mention. Only The Situation Room, with one segment on July 3, and Erin Burnett Outfront, with one segment and four news briefs on July 3, July 9, July 10, and July 12 covered the story. On Fox News, only Fox Report with Shepard Smith has mentioned the LIBOR scandal, airing two short news briefs on July 2 and July 11, totaling just over one minute. Finally, two news briefs on MSNBC, from the July 2 edition of Hardball with Chris Matthews and the July 3 airing of Politics Nation, covered the controversy in some way, totaling only about half a minute.
CBS' Evening News with Scott Pelley deserves special mention for providing the most in-depth coverage in evening programming. On July 3, the program was the first to run a full-length segment (lasting almost 3 minutes) on the scandal. Evening News ran a second story lasting about two and a half minutes on July 12, detailing the city of Baltimore's lawsuit against several U.S. banks under investigation.
The other two flagship nightly broadcast news shows, ABC's World News with Diane Sawyer and NBC's Nightly News with Brian Williams, have never mentioned the story.
With regard to coverage on these networks' morning shows, the numbers are still small, and the segments are dominated by short, 10-to-30-second-long news briefs that lack the context necessary to properly explain the controversy. In total, morning weekday and weekend shows -- not including the extended discussion on Up with Chris Hayes -- offered only approximately 16 minutes of reporting on the LIBOR scandal.
CNN led the pack with about seven minutes over five segments. Early Start ran three of those on July 3, July 4, and July 9. Saturday Morning News broadcast one segment on July 7, and Starting Point ran one short news brief on July 3. CBS covered the story for just over four minutes in six segments on June 28 (making the network the first to report this story), July 2, July 3, July 4, and July 5 -- five of which were news briefs lasting 20 seconds or less. NBC's Today broadcast three-and-a-half minutes over three segments on July 2, July 3, and July 5. Two were short news briefs lasting less than 30 seconds each. ABC's and MSNBC's coverage was each just about half-a-minute long. Fox News' morning show, Fox & Friends, did not cover the LIBOR scandal at all.
By contrast, Up with Chris Hayes' July 7 segment was almost 19 minutes long, including a roundtable discussion with two economists, Jared Bernstein (former chief economist and economic adviser to vice president Joseph Biden) and Karl Smith (economics professor at the University of North Carolina at Chapel Hill). That's longer than all broadcast and cable morning coverage surveyed and substantially more than primetime coverage, arguably when these networks have their highest viewership.
None of the other networks' Sunday morning talk shows, including ABC's This Week with George Stephanopoulos, NBC's Meet The Press with David Gregory, CBS' Face the Nation, CNN's State of the Union with Candy Crowley, and Fox's Fox News Sunday with Chris Wallace, have mentioned the scandal.
Media Matters searched the Nexis and Factiva databases for news transcripts of morning and evening programs on broadcast (ABC, CBS, NBC) and major cable news (CNN, Fox News, and MSNBC) networks between June 27, 2012 (the day the Barclays story broke) through July 12, 2012 mentioning the LIBOR scandal. For weekdays, we included all morning shows airing between 4:00 a.m. and 9:00 a.m., evening cable shows airing between 5:00 p.m. and 11:00 p.m., and each broadcast networks' nightly news program. For weekends, we only included each network's morning lineup. For programs falling within these parameters that were not included in Nexis or Factiva, we searched transcripts from our video archive.
We searched using the following keywords: “LIBOR,” “Barclays,” “British bank,” “UK bank,” “Bob Diamond,” “Robert Diamond,” “Marcus Agius,” and all variations of “rate” and “fix.” We reviewed the raw video of each result to time the length of each segment, teaser, and mention. When transcripts for a particular program were not available, we reviewed the raw video.
Included in the results are the following weekday programs: ABC's Good Morning America and World News with Diane Sawyer; CBS' Morning News, This Morning, and Evening News with Scott Pelley; NBC's Today and Nightly News with Brian Williams; CNN's Early Start with Ashleigh Banfield and Zoraida Sambolin, Starting Point with Soledad O'Brien, The Situation Room, Erin Burnett Outfront, Anderson Cooper 360, and Piers Morgan; Fox News' Fox & Friends First, Fox & Friends, The Five, Special Report with Bret Baier, Fox Report with Shepard Smith, The O'Reilly Factor, Hannity, and On the Record with Greta Van Susteren; MSNBC's Way Too Early with Willie Geist, Morning Joe, Hardball with Chris Matthews, Politics Nation, The Ed Show, The Rachel Maddow Show, and The Last Word with Lawrence O'Donnell.
Included in the results are the following weekend programs: ABC's This Week with George Stephanopoulos; CBS' Face the Nation; NBC's Meet the Press with David Gregory; CNN's Saturday Morning, Sunday Morning, and State of the Union with Candy Crowley; Fox News' Fox & Friends Saturday, and Fox & Friends Sunday; MSNBC's Weekends with Alex Witt, Up with Chris Hayes, and Melissa Harris-Perry. Meet the Press' July 8 show was preempted by sports.