I just wanted to say I appreciate your taking the time to educate me on this, banking is so cultish and esoteric sometimes, you have given me a direction to focus my reading to expand my knowledge, so I am much obliged.
In particular, I didn't realize that LIBOR wasn't actually used by the American banks for interbank stuff, but was used voluntarily in contracts. That LIBOR impacted so much of America and they allowed it to do so voluntarily (or out of ignorance) is astounding to me. I wish all this kind of information was layed out in a single place more clearly for public conspumption.
One other clarification for you, many floating-rate lending agreements actually allow for the borrower to select between the Fed rate and LIBOR throughout the term of the agreement. As I understand, the prevalence of LIBOR in US contracts at least somewhat coincided with the increased globalization of US business as, from a risk management perspective, sometimes you may want the interest rate on your borrowings to reflect a different economic sentiment than just the US. Clearly, once LIBOR started being manipulated by the bankers, it no longer accurately reflected the market it was supposed to represent, but its not always about having the most "accurate" rate, but aligning/managing your risk appropriately.
In particular, I didn't realize that LIBOR wasn't actually used by the American banks for interbank stuff, but was used voluntarily in contracts. That LIBOR impacted so much of America and they allowed it to do so voluntarily (or out of ignorance) is astounding to me. I wish all this kind of information was layed out in a single place more clearly for public conspumption.