Avalos has already met with the heads of different city departments and agencies in an effort to determine what kinds of losses the public might have sustained as a result of LIBOR rigging. Pollock said the city's finance staff and attorneys are currently working closely with the city's airport, retirement system, and Office of the Treasurer to gauge the size of the problem.

"LIBOR rigging may have impacted the payments under the airport's swaps," said Kevin Kone, who oversees capital finance for the San Francisco International Airport. The swaps Kone is referring to include seven interest rate swaps that the airport used to convert variable rate debts into fixed rates for half a billion of SFO's bonds (see "The losing bets," 2/28/12).

The swaps require SFO to pay a fixed rate of between 3.4 and 3.9 percent on its half-billion dollars in debt, while the banks pay about 60 percent of LIBOR. When SFO signed these swap contracts years ago, 60 percent of LIBOR was roughly equal to 3.4 percent, meaning the net payments between SFO and the banks basically canceled one another out. However, if LIBOR was later rigged downward by the banks, then the net interest rate payments would shift in favor of the banks, draining hundreds of thousands or even millions from SFO's capital budget.

"As an example of the order of magnitude, if LIBOR were set artificially low by 0.25 percent for a full two years, the Airport would receive $900,000 less each year (for a total of $1.8 million) than it should from its swap counterparties," explained Kone in an email.

The airport's counterparties on its swaps included JP Morgan Chase, Merrill Lynch, and Goldman Sachs. JPMorgan Chase sits on the committee of banks that sets various LIBOR rates, as does Bank of America, which bought Merrill Lynch in 2008. Both JPMorgan Chase and Bank of America are named as conspirators in the LIBOR lawsuits pending in federal court. JPMorgan Chase and Bank of America are also the subject of federal criminal investigations concerning LIBOR rigging.

Other losses may have been suffered by the San Francisco Employees' Retirement System which makes investments in derivative instruments that are linked to LIBOR. "The retirement board has been looking at this," said Nadia Sesay, director of the Controller's Office of Public Finance. "We know Retirement has exposure and they're assessing their portfolios."

According to the most recent audit of the Retirement System's portfolio, SFERs holds two interest rate swaps on its books with a notional value of $15 million. In prior years, SFERs held other swaps. In 2010, the Retirement System's audit showed three interest rate swaps with a total value of $41 million. Over the last two years these swaps drained $5.3 million from the pension system, and some of these losses might have been due to the downward manipulation of LIBOR. Also on the Retirement System's books are other investments in bank loans, options, and other securities that might have been impacted by the LIBOR fraud.

Still more losses due to LIBOR-linked instruments on the city's books will be investments held by the city treasury in pooled funds. Banks offer various investment products to local governments that need a temporary place to park millions or billions in cash; the returns on these investment are often pegged to LIBOR. Just as with the airport's swaps with JPMorgan and Merrill Lynch subsidiary, often times these so-called "municipal derivatives" investments are sold to cities by the same global banks that sit on the British Banker's Association panels that determine the various LIBOR rates.