Meant to represent the amount big banks charge each other for a loan, LIBOR is the benchmark against which millions of loans and upwards of $800 trillion in value (loans, securities, and notional derivative contracts) is measured. When Barclays PLC (LON:BARC) (NYSE:BCS) $450 million settlement with regulators was made public last week, a couple questions were raised: Why does the LIBOR rate matter and who does it affect? The rate matters because it directly or indirectly affects at least 300 million financial and non-financial businesses worldwide though its benchmark role – financial companies often base their rates as some percentage above LIBOR and non-financial companies often borrow at up to a few percentage points above LIBOR.

How big of an effect are we talking about? Because rates were generally reported as artificially lower than what the market would indicate, borrowers generally benefited and investors’ interest earnings lost out. On the borrower side, banks likely won’t see lawsuits from businesses and individuals that paid too little for their loan, but will likely see some lawsuits from companies and customers that paid too much for their loans when the LIBOR was reported high (to date, a few cases have surfaced in federal court, from individual traders to companies such as Charles Schwab). The pie of liability could be big. Presuming a quarter of the reporting was too high by an average of 20 basis points, and banks might be on the hook to borrowers over the 2005-2011 time frame by upwards of $60 billion in undue borrowing costs. The largest share of the liability pie banks could face is from professional investors. Presuming three-fourths of the reporting was too low by an average of 20 basis points, and banks might be on the hook to borrowers over the 2005-2011 time frame by upwards of $2 trillion.

Overall, although actual payments made by banks to borrowers and investors likely won’t approach the roughly estimated $2.6 trillion in liability, banks could be on the hook for some big numbers.