LIBOR, which stands for "London Interbank Offered Rate," is supposed to represent the interest rate at which major banks can borrow from each other. For instance, if Barclays wanted to borrow money for three months from Bank of America, what rate would Barclays have to pay? Traders in Ted's position at major banks around the world are responsible for submitting their best estimate of what that rate is. The highest and lowest few of those submissions are then tossed and the rest averaged out to get to the final LIBOR rate.
You may be tempted to gloss over this whole ordeal because of the "London" in LIBOR ("We're in America damnit!") and the fact that some of this sounds a bit esoteric. But in an era of media overhype of nearly everything, this is a truly market-shaking scandal.
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