In April 2013 the journalist Matt Taibbi published a Rolling Stone feature called "Everything Is Rigged". His argument was simple and alarming: some of the most important numbers in global finance, benchmark interest rates used to price trillions of dollars of loans and derivatives, were being manipulated by the very banks and brokers that helped set them. The first scandal, over Libor, was already public. The second, over a lesser-known swap benchmark called ISDAfix, was just coming to light.
Years of fines, lawsuits and reforms have since shown that Taibbi's central warning was largely right. Benchmarks that relied on banks reporting their own estimates were open to abuse, and regulators on both sides of the Atlantic found that traders had tried to nudge them for profit. This article explains what happened, how much the banks paid, and what changed.
What Libor was and why it mattered
Libor, the London Interbank Offered Rate, was for decades the reference point for an enormous range of financial products: mortgages, student loans, corporate loans and, above all, interest-rate derivatives. Estimates of the value of contracts tied to it range from about $350 trillion to more than $500 trillion.
The rate was not based on actual transactions. Each morning a panel of large banks told the administrator what interest they believed they would pay to borrow from other banks just before 11 a.m. in London. The four highest and four lowest submissions were thrown out and the rest averaged, and the result was published at 11.30. Because there often was little real interbank lending behind those numbers, banks were essentially submitting educated guesses, which made the system vulnerable.
How the Libor scandal unfolded
The story broke into public view on 27 June 2012, when Barclays agreed to pay $200 million to the US Commodity Futures Trading Commission, $160 million to the US Department of Justice and £59.5 million to the UK Financial Services Authority over attempts to manipulate Libor and its euro equivalent, Euribor. Investigators found two kinds of misconduct. Traders asked colleagues who made submissions to move the rate up or down to benefit their own positions. And during the 2008 financial crisis, some banks reported artificially low borrowing costs to look healthier than they were.
Other penalties followed quickly:
- UBS paid about $1.5 billion to US, UK and Swiss regulators in December 2012.
- ICAP, the interdealer broker, paid $65 million to the CFTC and £14 million to the UK Financial Conduct Authority in September 2013.
- Rabobank paid €774 million in October 2013.
- The European Commission fined several banks over yen Libor and Euribor cartels in December 2013, including €260 million for RBS and €259 million for Deutsche Bank.
- Lloyds paid about £218 million in July 2014.
- Deutsche Bank paid about $2.5 billion to US and UK authorities in April 2015.
MIT finance professor Andrew Lo, as quoted by Taibbi, said the affair "dwarfs by orders of magnitude any financial scam in the history of markets." Individual traders also faced prosecution. The best known, former UBS and Citigroup trader Tom Hayes, was convicted in London in 2015 of conspiracy to defraud. In July 2025, however, the UK Supreme Court quashed his conviction, finding the trial judge had misdirected the jury, a reminder that the legal picture around individual blame remained contested even as the banks paid.
ISDAfix: the second benchmark under scrutiny
ISDAfix, created in 1998 by the International Swaps and Derivatives Association with Reuters and the broker that later became ICAP, was the daily reference rate for fixed-rate interest-rate swaps. Swaps let borrowers such as cities, pension funds, companies and governments exchange floating interest payments for fixed ones, or the reverse, to manage their debt. ISDAfix was used to settle swaptions, to value swap portfolios and to calculate payments when swaps ended early. Taibbi put the swaps market at around $379 trillion in notional value.
Like Libor, ISDAfix depended on quotes submitted by a group of banks. In 2013 US regulators began examining whether traders at ICAP and many of the world's largest banks had coordinated to move the rate at the moment it was fixed, benefiting their positions at the expense of clients.
The investigation produced results. On 20 May 2015 the CFTC ordered Barclays to pay $115 million for attempted manipulation and false reporting of ISDAfix, its first enforcement action over that benchmark. Goldman Sachs was later fined $120 million by the CFTC over the same rate. In private US litigation, pension funds and municipalities accused banks of conspiring to manipulate ISDAfix from at least 2009 to 2012. By June 2018, after the last five defendants agreed to settle, the total recovered from 14 banks and ICAP reached $504.5 million, with Goldman's $56.5 million the largest single payment. The defendants did not admit wrongdoing in those civil settlements.
Who pays when a benchmark is rigged
Benchmark manipulation can sound abstract, but the money comes from somewhere. A shift of a fraction of a percentage point on a rate tied to trillions of dollars can move very large sums between parties. When a bank's trader profits from a nudged rate, someone on the other side of the contract loses: a city paying on a swap it entered to protect its budget, a pension fund valuing its holdings, or a borrower whose loan resets at the published rate.
The deeper damage was to trust. Libor and ISDAfix worked only because everyone assumed the numbers were honest. Once regulators showed they could be gamed, the entire structure of rate-setting by bank estimate lost its credibility.
What changed afterwards
The scandals reshaped how benchmark rates work:
- New administrators and oversight. Libor moved from the British Bankers' Association to ICE Benchmark Administration in early 2014, under regulation by the UK Financial Conduct Authority.
- ISDAfix rebuilt. In April 2015 it was replaced by the ICE Swap Rate, calculated from tradable market data through an automated process rather than bank quotes.
- Libor retired. Most Libor settings stopped or became unrepresentative at the end of 2021, and the last US dollar panel rates were published on 30 June 2023.
- Transaction-based replacements. In the US, regulators chose SOFR, the Secured Overnight Financing Rate, which is based on actual overnight lending backed by Treasury securities. Other markets adopted similar rates, such as SARON in Switzerland and TONAR in Japan.
Rigged, but not by a secret cabal
Taibbi's piece opened with a provocative joke that conspiracy theorists had been right all along. The documented reality is less mysterious and more instructive. There was no single hidden hand. Instead, traders and submitters at a number of competing institutions exploited weak rules, poor supervision and the fact that the benchmarks rested on self-reported numbers. Old conspiracy myths about particular families or secret societies explain none of it, and some of those myths are rooted in prejudice. The lesson is about incentives and oversight: when the people who profit from a number also help set it, the number needs independent checks.
For anyone following finance today, the episode is a reason to ask how a benchmark is calculated, who supplies the data, and who watches them. Those questions now shape the rates that replaced Libor and ISDAfix.
Sources: Matt Taibbi, Rolling Stone: Everything Is Rigged (April 2013); Wikipedia: Libor scandal; Wikipedia: Libor; Wikipedia: ISDAfix; CFTC press release 7181-15 (20 May 2015); Business Insurance: US rate-rigging payouts top $500M as final banks settle (25 June 2018).
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