It appears that the Libor scandal may be about to smash over the shores of the U.S., as attorney-generals from New York and Connecticut, as well as the U.S. Justice Department, are ramping up their investigations into alleged manipulation of the benchmark Libor interest rate.

The U.S. has, up until now, been relatively slow to pick up on the developing scandal in the U.K. after Barclays was hit with a record fine of $451 million in the U.K. and U.S. on June 27 after Britain’s second biggest bank admitted to manipulating the London interbank lending rate (Libor) from 2005-2009 to the benefit of its derivative positions, as well as by a desire to make the bank look stronger during the financial crisis.

The scandal has already taken in U.S. Treasury secretary Tim Geithner and U.S. Federal Reserve chairman Ben Bernanke who have been asked to testify before a Senate sub-committee about rate manipulation.

Financial regulators on both sides of the Atlantic are also still investigating not only Barclays but Bank of America, JPMorgan Chase, Citigroup and many more over the matter as lawsuits and fines could end up costing the banks many billions of dollars.

“This could get very ugly in a hurry for some banks,” Peter Tchir, founder or TF Market Advisors, wrote in a note.

Libor, which serves as a fundamental benchmark to around $550 trillion of financial contracts around the world, is a notional rate set by a 16-bank panel. They are all asked how much it would cost to borrow from one and other and the rate is then calculated and published daily by global news and information provider Thomson Reuters on behalf of the British Bankers’ Association, a U.K. trade body, covering a variety of currencies and time durations.

Libor is used as the primary benchmark of short-term interest rates globally, a barometer to measure strain in the money markets and the basis for settlement of interest rate contracts on many of the world’s major futures and options exchanges. Asset managers also use Libor as a benchmark for a number of funds. While Libor is used as the basis to derive just under half of all U.S. mortgages.

New York and Connecticut are investigating whether they lost money in their own investments as a result of the alleged manipulation. The city of Baltimore has already filed a lawsuit against many of the banks allegedly involved, claiming that the alleged manipulation cost them money. The move comes as the US Justice Department appears to be stepping up its own investigation into the scandal. Federal investigators are building criminal cases against several financial institutions, the New York Times reported at the weekend. Barclays traders involved in allegedly manipulating Libor rates could face possible U.S. charges.

In the U.K., meanwhile, the epicenter of the crisis, senior managers at Barclays have told staff that other banks will be enveloped by the scandal. The memo said that revelations about its rivals would “put in perspective” Barclays’ culpability.

The Financial Services Authority, the U.K. regulator, broke the story on June 27 with U.S.-born Barclays chief executive Bob Diamond falling on his sword soon after as the crisis saw the U.K. bank’s share price slump by around 15% in the two days following the announcement.

Sir Mervyn King, governor of the Bank of England, today came under fire from MPs at a U.K. Treasury select committee hearing about the Libor scandal for saying that he did not know about the Libor rigging until the Barclays fine was announced late last month.

King, though, did highlight Barclays’ worrisome relationship with regulators. “It is possible to sail close to the wind once, maybe twice or three times—[but] four or five times you do have to ask questions about the navigational skills of the captain on the bridge,” said King.

At the same hearing yesterday, Lord Adair Turner, chairman of the FSA, was asked by MPs if ‘this was the tip of the iceberg?’. He said: “We don’t know, but I would be amazed if this was everything.”

Another senior FSA executive, Andrew Bailey, admitted to the committee yesterday that at Barclays “there was a culture of gaming, and gaming us”.

In the U.K., the FSA does not have the power to prosecute Libor malpractice, rather it can issue heavy fines, but the Serious Fraud Office, an independent U.K. government department, is now considering whether to bring criminal charges over the Libor scandal. The U.K. government has also ordered an independent review into the future operation of Libor, while MEPs are pushing for the European Union to introduce strict new market abuse rules with criminal prosecutions and big fines, in line with the U.S..