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Several U.S. states have joined the investigations swirling around the illegal manipulation of the bank-to-bank interest rate known as “Libor” – an international scandal that may have cost governments and consumers billions of dollars.

Libor is a shorthand term for the London Interbank Offered Rate, a key measure that sets the basis for interest rates on financial instruments around the world. The attorneys general in Connecticut and New York have led the charge thus far, working together since early this year.

Regulators in the U.S. and the United Kingdom have charged that some banks manipulated Libor as they reported borrowing costs, either overstating or understating the figures to depress or inflate the rate. Some contend the false reporting was an attempt to puff up a bank’s standing – lower costs, for example, would signal lower risk. Others see more systematic manipulation, a deliberate rigging to squeeze higher profits.

The ballooning scandal has touched more than a dozen prominent financial institutions on multiple continents, and it may have had a worldwide impact on trillions of dollars worth of securities, debt and trades. State officials are interested because the rate rigging may have cost American municipal debt issuers and taxpayers as much as $6 billion.

“It comes out to a big number,” said Peter Shapiro, managing director at Swap Financial Group. “That would’ve been available to hire teachers or police officers or make investments for the public good.”

In addition to New York and Connecticut, Massachusetts, Florida and North Carolina have confirmed that they are formally investigating the matter.

Maryland is contemplating a formal investigation, and several other states are quietly participating in the effort as well.

“The attorneys general will follow the evidence wherever it leads,” Connecticut Attorney General George Jepsen’s office vowed several months ago, “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.”

Libor is set each day based on an average of banks’ borrowing costs – essentially, the interest charged on money moving between them.

Those self-reported costs from the banks are calculated and averaged, establishing a given day’s Libor.

That figure becomes the basis for interest rates on a host of transactions such as billion-dollar government debt deals and swaps to student loans and consumer credit card purchases.

For states and other governments, the implications of the scandal are enormous. There’s also the effect on debt-holders. It’s possible they lost millions.