That's one of the most alarming things about the LIBOR scandal: how absurdly easy it was for just 16 banks to rig the entire world financial system in their favor for several years on end. LIBOR isn't actually a market rate that is determined by the loans banks make to one another. Rather, it's a rate the banks claim they would able to secure loans from their peers, and the final LIBOR numbers for any given day are determined not by some independent authority, but instead by the British Bankers Association's panel members — the banks themselves.

"The problem is that there's a clear conflict of interest," explained Rosa Abrantes-Metz, an economist at the NYU Stern School of Business who has closely studied LIBOR and is an expert in financial markets and cartels. "Banks make proprietary trades on instruments related to LIBOR, so they do have an interest in moving LIBOR in their own favor."

Abrantes-Metz is currently working as an expert in several LIBOR lawsuits. Among her recent research findings in studies that tracked LIBOR alongside other economic indicators is that all the conditions of a potential conspiracy are present, and empirical evidence points toward coordinated fraud. "The banks had, as we say, the means, motive, and opportunity," concluded Abrantes-Metz.

Regardless of what San Francisco's public hearings on LIBOR uncover, the road ahead will be long and complicated. When asked about the the expected flood of LIBOR litigation, Abrantes-Metz said it's just getting started. "We've only had the settlements of three banks with the authorities [Barclays, UBS, and Credit Suisse]. I've read there are investigations of 14 of the 16 banks that were on the LIBOR panel. That's just US Dollar LIBOR."

"Then there's Euroibor, and there's 40 banks on that panel. Then there's Tibor which some overlapping banks with Yen Libor banks," said Abrantes-Metz, referring to other key global interest rates denominated in Euros and Yen. Like LIBOR, these lesser rates are used to calculate the values and obligations of trillions in securities and payments.

"Those are just the governmental investigations," said Abrantes-Metz. "I'm sure as more evidence comes out of these settlements it will probably generate more private litigation. I think this is to go on for very many years."

Meanwhile, a proposal that Avalos made in the fall of 2011 to have the city start a municipal bank is nearing completion of its legal analysis by the City Attorney's Office. While it's legally complicated and wouldn't eliminate the local need for big banks, he said the LIBOR scandal reinforces the need for alternative lending institutions with great public accountability. "My goal is this year to have something on paper that will lead to a municipal bank," Avalos told us. "These institutions are willing to rig the system, and we could protect ourselves more locally if we had a banking institution."