The New York Times reports, "
New York Fed Was Aware of False Reporting on Rates."
Geithner was chair of the New York Fed in 2008. See the Wall Street Journal, "Geithner Wrote Libor Memo to UK in 2008" (via
Google):
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 ...
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."
They said "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.
No wrongdoing, eh?
Well, check Charles Gasparino at the New York Post, "
What did Tim know? Geithner’s Libor labors":
The latest development in the Libor-manipulation scandal is that the banks weren’t really fixing the price of the key interest rate in total secret — US regulators were aware of the sleazy activities at the time, and seemed to have done nothing.
Which should surprise no one.
I can’t tell you how much federal officials knew about the activities of Barclay’s, JPMorgan, Citigroup and the other big banks at the center of the maelstrom. In coming weeks, both Federal Reserve chief Ben Bernanke and Treasury Secretary Tim Geithner will inevitably discuss the mess when they appear before Congress....
Long before President Obama tapped him for Treasury, Geithner was one of those bureaucrats. He worked at the Clinton Treasury, the IMF and then as president of the New York Federal Reserve Bank for five years — where he played a key role in the bailouts and the rest of the government’s response to the financial crisis.
The New York Fed has two main functions: It handles the transactions whereby the overall Federal Reserve controls the nation’s money supply, and it’s supposed to be the chief regulator of the big banks in its region.
When Obama named him for Treasury, the banking industry hailed Geithner as a godsend. Shares shot up on his announcement, and CEOs called it a wise choice for a key job at a time of crisis.
But the dirty little secret on Wall Street is that the New York Fed is a horrible regulator: It sees its chief job as keeping the banking system intact. Since it needs its member banks to buy US government debt and to control the money supply, the last thing it wants to do is shed light on the banks’ shady practices.
Which is why the Wall Street power brokers loved Geithner so much: On his New York Fed watch, he basically let them get away with the financial equivalent of murder, letting them take on the astronomical amounts of risk that ultimately blew up the system in 2008.
And then, when they needed a bailout, he was there with a plan that made sure their banks and jobs were safe.
That’s why I’m saying Geithner is such an important witness as the Libor investigation expands to include the possibility that banking-industry cops like himself looked the other way.
Photo Credit: Treasury Secretary designee Tim Geithner meets Democrat Finance Committee Chairman Max Baucus on November 25, 2008, via
Wikimedia Commons.