New York and Connecticut attorneys general have joined forces to investigate alleged manipulation of the Libor interest rates.
The scandal is already being investigated by the US justice department and financial regulators on both sides of the Atlantic. But the involvement of New York state is likely to ramp up the investigation.
New York state's Martin Act gives its attorney general the most wide-ranging investigative powers of any state. Eliot Spitzer used the act to force a massive settlement out of Wall Street following the analysts scandal of the early 2000s.
New York attorney general Eric Schneiderman and Connecticut attorney general George Jepsen are working together in the investigation. A spokeswoman for the Connecticut attorney general confirmed that two state lawyers had been working on the Libor issue "over the last several months" looking at "alleged anti-competitive conduct related to potential rigging and manipulation of benchmark interest rates."
"The attorney generals will follow the evidence wherever it leads and with the goal of providing restitution to state agencies, municipalities, school districts and not-for-profit entities nationwide that may have been harmed by any illegal conduct," she said.
Barclays, JP Morgan, Bank of America and UBS are among the banks being investigated over allegations that they colluded to fix rates between 2005 and 2007. Last month, Barclays paid a record $451m to settle charges it submitted false numbers for the benchmark rates, which are used as the basis for $500tn in securities including complex derivatives, car loans and 45% of US mortgages.
New York and Connecticut are investigating whether they lost money in their own investments as a result of the alleged manipulation. The city of Baltimore has already filed a lawsuit against many of the banks allegedly involved, claiming that the alleged manipulation cost them money.
As The Guardian article notes, New York's attorney general has the most wide-ranging investigative powers of any state.
Spitzer used those powers when he was attorney general.
Andrew Cuomo, who was attorney general during the financial crisis and the aftermath, did not - at least not in any meaningful way. Not one banker responsible for the financial crisis of 2008 was brought up on charges by Andrew Cuomo when he was attorney general.
If Tim Geithner knew of the LIBOR fixing when he was head of the Federal Reserve Bank of New York, then you have to think Andrew Cuomo knew of the LIBOR fixing when he was attorney general.
After all, Geithner's tenure at the Federal Reserve Bank of New York overlaps Cuomo's tenure as attorney general.
Since Cuomo refuses to release his attorney general papers, we can't know just how much Cuomo actually knew of the LIBOR fixing scandal.
And since Cuomo refuses to release the donor list for his SuperPAC, the Committee To Save New York, we can't know if his SuperPAC took cash from any of the banks or bankers involved in the rate fixing.
In addition, since Cuomo only uses untraceable communication methods as governor, we will probably never know what it is he wants to do about he scandal now - there is no paper trail.
But we do know one thing about Cuomo and the LIBOR scandal.
He did nothing about it when seemingly everybody in positions of power on Wall Street, the Federal Reserve and government seemed to know about the corruption.
And Eliot Spitzer, for all his faults, certainly would have.