During discussions about the municipal derivatives case, Nilson recalled, the firms brought up the developing Libor rate situation.
After talking over the issue, Nilson said, Baltimore officials decided that the city may have been substantially damaged by an artificially low Libor. The city signed on as a plaintiff.
The upfront cost to Baltimore for cases like the Libor suit is minimal, Nilson said. The outside attorneys work on a contingency fee basis — they get paid only if they win, he said.
Still, despite the low cost and potential returns of class action suits, the city is deliberate about the cases it joins, Nilson said.
For example, Baltimore recently turned down an opportunity to join a product liability case because the city had not purchased enough of the product, he said. The damage to the city just wasn't there, Nilson said.
Nilson and his outside counsel have no doubt Baltimore lost money — money that could have been spent to keep open recreation centers and fire companies — because of Libor rigging.
Carmody expects monetary recovery to be through the roof. "This is going to get real ugly for banks," he said.
Black, the city finance director, is more reserved. He thinks anything the city gets from the case will be negligible compared to the overall budget, which amounted to $2.3 billion in fiscal 2012.
"The money's obviously very important, but what's equally important is the fact that this activity was caught and these institutions are going to be held accountable," Black said.
Swagel, the former Treasury economist, believes it's still an open question as to whether Libor rigging, if it happened, is quantitatively important to a city like Baltimore.
Regardless, if other banks release information during discovery that is as damning as the records released by Barclays, Swagel said he suspects many bank executives could be forced to resign. Barclays' top executives have already stepped down over the scandal.
Late last week, a dozen Democratic U.S. senators called for a criminal investigation of banks involved in the matter, and the Federal Reserve Bank of New York released documents indicating that as early as 2007 regulators there suspected Libor manipulation.
Those documents were released in response to another congressional inquiry, by Rep. Randy Neugebauer, a Texas Republican who chairs the investigations subcommittee of the House Committee on Financial Services.
"The manipulation of Libor is outrageous," Swagel said. "It really goes to the heart of our financial system."