When US Treasury Secretary Timothy Geithner called the Libor-setting process "structurally flawed", his intention was pretty clear. As British banking is beset by one scandal after another, the Americans are looking to lure back business by trashing London's reputation - while Frankfurt and Paris cheer them on.
Of course, US banks are hardly paragons of virtue themselves; some are already under investigation as part of the same probe that nailed Barclays. But after such own goals as the Interest Equalization Act and Sarbanes-Oxley regulation, which allowed London to overtake New York as the world's leading financial centre, the US sees a chance to seize back the intiative.
Given that London's economy, and by extension that of the UK as a whole, is heavily reliant on the financial services sector and the tax revenues it generates, this should concern us all. Wall Street's investment banks might be bigger than ours, but London leads the world in areas like insurance, inter-dealer broking and foreign exchange trading.
Barclays and others may well see their funding costs rise as ratings agencies downgrade their creditworthiness, and that will impact the margins and profits. They also face possible civil litigation and all the costs that entails, plus the threat of financial transaction taxes from Brussels. Serious as these issues are, the long-term damage to London's reputation could have much more serious mplications for the wider economy - as lower taxes, higher unemployment and slower growth lead to longer and deeper austerity measures.
