The city had no choice but to fight, said Rawlings-Blake. "We are faced with closing fire companies, closing recreational centers … We have services that have been cut year after year; services that people depend on. Opportunities for young people, the cleanliness of the city: everything is affected by the budget," she said.
"We can't afford to leave money on the table," she said.
Baltimore has a reputation for taking on the banks. Earlier this month Wells Fargo settled a suit launched by the city four years ago that alleged the bank discriminated against black and Latino mortgage borrowers.
"It's certainly disappointing, and I understand why a lot of people have lost a lot of trust and faith in the financial institutions. They are pretty much playing fast and loose with the people they are meant to protect," she said.
"We stand up for ourselves," she said. "One thing about Baltimore is that we are not afraid of a fight. There are too many needs we have in this city."
This case looks set to put all others in the shade. Policymakers around the world have called for an overhaul of the system that underpins $500 trillion of contracts globally – everything from home loans to arcane derivatives.
Stephen Bainbridge, a professor of law at UCLA, said the case was "one of the worst examples of abuse of trust that I can remember in 25 years of following corporate governance". Given the scale of Libor's influence, Bainbridge said, this could emerge as "the defining financial scandal of the meltdown".
Bainbridge believes the Justice Department may build an anti-trust case against those involved that could ultimately lead to a settlement as large as that agreed in the U.S.'s massive suit against the tobacco industry. Anti-trust laws allow three times the damages for those convicted of collusion.
He believes a suit like Baltimore's may prove harder to prove. The city's lawyers will have to prove direct "loss causation" – in other words, that bankers allegedly fixing rates in London directly hit Baltimore's bank balance.
"Proving that chain of events can be difficult," said Bainbridge.
Baltimore city solicitor George Nilson said he was confident there was a good case to answer. He pointed out that the process of discovery – when the city gets hold of internal emails and documents from the bank – had not even started yet. Since the suit was filed he said he had "not heard anything that makes me feel less enthusiastic about the case."
Nilson said he had been taken aback by the massive level of interest in the case, especially from the European press. He said he expected that interest to grow as people in the U.S. became more aware of the scandal. "What it says to the defendants is Libor is no longer something tucked away in a dark corner of the room."
He said that his one fear was that just as some banks were too big to fail, this could be a case that was "too big to try".
Intellpuke: You can read this article by Guardian U.S. Business Correspondent Dominic Rushe, reporting from New York City, N.Y., in context here: www.guardian.co.uk/business/2012/jul/19/baltimore-libor-financial-crisis