Is LIBOR Accurate?

The Banking Law Prof Blog has a brief discussion and link to a Wall Street Journal article suggesting that LIBOR (the London inter-bank offered rate) may be artificially low.  Banks in trouble may have been reporting lower rates for inter bank borrowing because they don't want to own up to their actual financial condition.  See Banking Law Prof Blog Article.  So, consumers had been puffing their credit to get home loans, if they are even asked.  Unregulated mortgage brokers puffed, or neglected to fully explain, the financial terms of mortgages they were handing out left and right.  These loans were then securitized and sent down the line.  Now, after those loans went south, partially causing our current economic "slow down," institutions are puffing the interest rate they are getting?  Is the state of the economy being puffed to us?  Let's hope all the huffing and puffing doesn't blow this house down.