DEAR BUBBAS AND BUBBETTES,
WOW!! Can this possibly be true?
Did Treasury Secretary Geithner already know about the fooling around with Libor back when GWB was President, and Timmy was then head of the FED in New York?
And even more amazingly, has he really kept this quiet from a credulous and gullible public all the while that he has been Secretary of the Treasury??? If so, why??? And what does President Obama intend to do about this now???
What a strange and embarrassing world we seem to live in today. Where on our benighted little planet has probity fled to this time?? Have you seen any lately??
Any thoughts of your own on this, and on how to hold these folks accountable for the myriad lives of the untermenchen that they have allowed to be destroyed by these banking predators??
How about offering them a vacation in one of those nice uncomfortable cells in a super-max for-profit prison where the emphasis is on optimizing lolly returns to privileged investors???
Enjoy and take care, Andy
GEITHNER WROTE “LIBOR MEMO” IN 2008
By Damian Paletta and Jon Hilsenrath, WSJ, 12 July 2012. Write to Damian Paletta at email@example.com
WASHINGTON—Timothy Geithner in 2008 sent a private memo to Bank of England Governor Mervyn King calling for six changes that he said would improve the credibility and integrity of the London interbank offered rate, a key interest rate that is now at the center of a international banking scandal, according to documents reviewed by the Wall Street Journal.
At the time the memo was sent, Mr. Geithner was president of the Federal Reserve Bank of New York and the financial industry was about to enter one of the darkest periods of the financial crisis. Mr. Geithner is now U.S. Treasury secretary. As Mr. Geithner sent the memo to London, U.S. regulators also began conferring about concerns related to possible distortions of Libor and what the impact might be, people familiar with the matter said.
The June 2008 memo, reported earlier by the Washington Post, provides a window into the role played by U.S. regulators in the Libor scandal, though possibly an incomplete window. More documents are due to be released Friday by the Federal Reserve Bank of New York, in response to demands by lawmakers for more information about Mr. Geithner's and the New York Fed's efforts to address questions about Libor.
The latest disclosure makes clear that Fed officials were aware of irregularities in the Libor interest-rate market. What is less clear is how far Mr. Geithner and other officials went to address the problem.
The Geithner recommendations, which came in a June 1, 2008, memo, included a call to "eliminate incentive to misreport" by banks. Investigators in the U.S. and U.K. are now probing whether banks intentionally misreported interbank lending rates in a way that distorted Libor, which could have affected interest rates for trillions of dollars-worth of financial banking products all over the world, including mortgages, student loans and complex derivatives. The misreporting of this interest rate also could have given the public and regulators a false sense of the health of the big banks involved in this market.
Mr. Geithner recommended that the British Bankers' Association, which sets Libor based on data submitted by different banks, "collect quotes" from a number of different banks but "randomly select a subset" of banks when determining Libor. This would take away the incentive of individual banks to game the system.
Mr. King responded favorably to the memo, a person familiar with the discussions said, and there were follow-up communications, though it couldn't be learned how close the Bank of England came to implementing any of the changes.
Fed officials became deeply concerned about the functioning of short-term lending markets in late 2007 and early 2008. One problem was that large banks developed troubles tapping short-term loans to fund their operations and their borrowing costs soared.
Mr. Geithner's memo was sent after an April 2008 article in the Wall Street Journal raised questions about the way Libor was set.
The memo could be released as part of a broader package of data the New York Fed is expected to disclose Friday in response to congressional lawmakers' queries about what knowledge the bank had of possible problems with Libor in 2007 and 2008.
Other recommendations in the memo from Mr. Geithner included calling for a more "credible reporting structure," that would have set up a set of best practices for banks when "calculating and reporting rates." The New York Fed recommended having the BBA require that a bank's internal and external auditors confirm that they were abiding by best practices.
Mr. Geithner also called for broadening the number of U.S. banks that were represented in some of the measurements of Libor. And the memo recommended that the BBA
"provide more specific guidance as to the size of the transaction being referenced in the reported quoted rates."
Several top officials from large British bank Barclays PLC have resigned in the wake of the company's $453 million settlement stemming from a long-running investigation into allegations that traders at the bank sought to manipulate interbank lending rates. A number of other U.S. and U.K. banks are under investigation.
The Federal Reserve Bank of New York has faced scrutiny in recent days after revelations that it had discussions in 2007 and 2008 with Barclays about the issue.
U.S. lawmakers in recent days have stepped up pressure on Mr. Geithner and the New York Fed for details of what they might have known regarding rate fixing in 2007 and 2008 and why more wasn't done to intervene. Both men are expected to be grilled on the subject at hearings later this month.
Twelve Senate Democrats on Thursday called on the Justice Department and federal banking regulators to pursue a widespread civil and criminal probe against bankers who might have unlawfully manipulated Libor.
The group of Democrats, including Sen. Jack Reed of Rhode Island and Carl Levin of Michigan, also asked the Justice Department to look into
"allegations that U.S. and foreign bank regulators may have been aware of this wrongdoing for years."
"regulators who were involved should be held to account for any failures to stop wrongdoing that they knew, or should have known about."
The senators don't allege any wrongdoing by Mr. Geithner in their letters, but they call on the Justice Department to scrutinize the actions of regulators at the time.
The lawmakers say the banks, by allegedly improperly manipulating Libor, could have boosted their trading positions and improved market perceptions of their health.
"But this can, and likely did, hurt millions of American families, businesses, and municipalities," they said.