Geithner drawn into Libor scandal

[MrMickeysMom]

Source: Washington Post

Documents obtained by The Washington Post show that Timothy F. Geithner, in an e-mail dated June 1, 2008, made six recommendations to the head of the Bank of England to reform the London interbank offered rate, known as Libor, while he was president of the Federal Reserve Bank of New York.



Read more: http://www.washingtonpost.com/business/economy/geithner-drawn-into-libor-scandal/2012/07/12/gJQArDhbgW_story.html?wpisrc=al_comboNE

---

As if this really surprises anyone, right?

[pnwmom]

1. Why are you implying he did something wrong?

From the WA article at the link:

While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way it calculated a critical global benchmark called the London interbank offered rate, or Libor, according to a June 1, 2008 e-mail obtained by The Washington Post.

Writing to the head of the Bank of England, among others, Geithner made six recommendations, which included eliminating incentives that could encourage banks to manipulate the rate and to establish a “credible reporting procedure.”

[MrMickeysMom]

6. Maybe it's this passage...

.."With Libor scandal threatening to migrate from London to Washington, pressure is growing on Geithner and other regulators to explain what they knew and when."

This is just starting... too late, but starting.

[pnwmom]

14. Geither had just been appointed in 2008, and it sounds like he gave reasonable advice. There is no

indication that he was complicit in any bank misbehavior.

[MrMickeysMom]

20. Was it his role to "give advice"?

These things are not benign events at his level. This manipulated rate is about the highest crime among lending and the banks were saturated... So, he should lean over and whisper "advice"?

[pnwmom]

22. Absolutely.

Britain is a sovereign nation, and Barclay's is a British bank. There wasn't much else he could do in 2008.

[MrMickeysMom]

24. I guess I see the banking industry as having no national boundaries...

Internationalists aside, the nature of what gets sold from one sovereign nation (e.g. sub-prime mortgage loans buy/sell, offshore)... affects the world.

This ethics here was far reaching, and is being played out now.

[SkyDaddy7]

34. I totally agree...

Obviously, he was not in on it or encouraging the practice to continue he was doing the exact opposite.

[bluesbassman]

8. Agreed. I'm no fan of Geithner, but that's a sloppy headline.

Why am I not surprised? (No offense to the OP, that's a slam aimed at the M$M).

Geithner may have "known" some of what was going on (he really could not have avoided it in his position at the time), but there is zero proof or even allegations of it at this point.

[leveymg]

51. 1) NY Fed knew for at least a year before any sort of memo was sent. 2) Nothing was said publicly.

As head of the NY Fed, Geithner had a fiduciary responsibility to alert the public that key rates and indices were being manipulated. He didn't.

It was nice knowing you, Tim.

New York Fed Says It Knew Barclays Was Underreporting Libor
Caroline Salas Gage, ©2012 Bloomberg News
Published 08:57 a.m., Friday, July 13, 2012

July 13 (Bloomberg) -- The Federal Reserve Bank of New York said it became aware that Barclays Plc was underreporting borrowing costs for the London interbank offered rate as early as 2007.

A Barclays employee explained to a New York Fed staffer in April 2008 that “Barclays was underreporting its rate to avoid the stigma associated with being an outlier with respect to its LIBOR submissions, relative to other participating banks,” the New York Fed said in a statement posted today on its website.

“The Barclays employee also stated that in his opinion other participating banks were also under-reporting their LIBOR submissions.”

http://www.sfgate.com/business/bloomberg/article/New-York-Fed-Says-It-Knew-Barclays-Was-3705086.php

[tularetom]

2. Um, that headline is a bit misleading

I'm no fan of Geithner, but that title makes it sound like he was complicit in the manipulations of the LIBOR rate by banksters.

When you actually read the article, you learn that Geithner's e-mail proposed remedies that would end those manipulations and punish those who engaged in them.

More bullshit from the Washington Post.

[DeSwiss]

9. ''....he proposed remedies that would end those manipulations...''

When he discovered the manipulations his job wasn't to propose remedies but to report the crime!!!

Rigging the interest rates that determine your and my credit card and mortgage rates isn't an in-house policy, it's a crime to rig and manipulate these rates. Timmeh knew Barclays was not setting rates and reporting them properly to LIBOR but instead of worrying about US and international laws being broken, he proposes ways to cover it up so they don't to get caught.

Geez.

[muriel_volestrangler]

13. If you know that he knew of specific crimes, when did you know?

And why didn't you report it?

[MrMickeysMom]

16. For fuck sake...

Can you not follow what Geithner's role should have been?

"And why didn't you report it"????

[muriel_volestrangler]

31. I think I can; but others here are making up their own facts

DeSwiss thinks that Geithner had details (such as that Barclays were specifically doing the fixing) which no-one else has talked about. My point was that if DeSwiss really did know this, when no other member of the public knows this, then DeSwiss must have had special information themselves - or is talking out of their arse.

Geithner's role, as a regulator in an associated country, was to do what he did - raise concerns that the system was open to abuse, and suggest ways of regulating it properly.

[MrMickeysMom]

39. Disagree.. I think that is a narrow understanding of Geithner's role...

The point I'm trying to make is that the American people should gain a better understanding of Geithner's involvement. I suggest that you expose yourself to more than what has popped up, including this rather tepid evidence from our "mainstream" media. All you have to do is to listen to those in the international banking community who understand the relationship between domestic (WaPo). Banking practices are an international practice BECAUSE this is a global "market place". Gain some wider sources of information.

Geithner's role was much bigger than you suggest. More light is shed by following more resources of that information. You could start by examining what is said by experts. For example, programs like "The Keiser Report"... Lots of people on either "extremes" (that's what they refer to as fringe, or those who have a much wider source of programming and written media. Those who might go to an online source such as "Zero Hedge", but that program, which is produced by RT contains a lot of interviews and references associated with those who are interviewed on that program. I've watched the report, but I've also followed up the international media. Have you seen much of this here state-side? Neither have I. Our media has been fairly well contracted to being owned by 6 or less firms in this country.

People are entitled to their own opinions, but not their own facts, I agree. Resources of this information are out there. I suggest DeSwiss had no more special information than I do or you do, depending on what we expose ourselves to.

"Knowledge is Good" - Faber College, 1962!

[Psephos]

26. Good point.

Sounds a lot like the Penn State defense, doesn't it?

[DeSwiss]

30. Lately it's become the ''standard defense''......

...for public officials - deny everything and blame someone else. But I also welcome this exposure. It is needed. The festering and cancerous wounds of this gov/bank corruption will have to be lanced and washed away.

The whole world's in an uproar, all of it building to a crescendo. Old scars that never healed, the lies and untruths from the past are being exposed and people are speaking the truth. Some of it ugly.

- Like Penn State.

"I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free because I know that I alone am morally responsible for everything I do."

~Robert A. Heinlein

[tularetom]

28. He wasn't the Libor police, he was head of the NY Federal Reserve

You make this sound like he was Joe Paterno trying to cover something up. I don't think he had any authority to make these changes and by writing the memo he was informing the people who actually had that authority that something needed to be done, or as you so eloquently put it, he was "reporting the crime!!!"

I hate to be in the position of defending this guy because I basically don't like him but it's not true that what he did indicates any complicity in the illicit activities of certain banks.

BTW the Post headline no longer reads "Geithner drawn into Libor scandal" it has been changed to "Geithner made recommendations on Libor in 2008, documents show". Why do you suppose that is?

[DeSwiss]

29. I wasn't aware I was making anything sound like anything other than the facts.

As you said, he was not the LIBOR Police. And as the head of the NY Fed, he discovers that Barlclays is not giving accurate information, thus rigging the LIBOR rate in favor of their clients. This is a crime. And he knew in that first moment when he discovered what was up, that the banks under his jurisdiction had been ripped off.

But instead of reporting this all to the ''proper'' authorities for criminal investigation (SEC, FBI, etc. -take your pick), he recommends ''remedies'' to ameliorate it. To smooth things over. Write things off as a ''financial anomaly.'' Or one of those freak one-in-a-million ''market corrections.'' Just the kind of wounded prey sound and bleating BS lawyers like to hear; which is exactly why a number of states Attorneys-General, as well as many large banks are lining-up their lawyers as we speak. This is the biggest swindle of all time. That we know of. But then it's always been rigged from the get-go. And the whole thing is coming apart and no amount of wishing it away is going to make it otherwise.

Timmeh knew that shenanigans were going on at Barclays, but he didn't tell anyone except the people in the exclusive TBTF Club. The result was The Great Recession (it followed immediately afterwards). So when TBTF banks can't pay their debts, we the Taxpayers pick up their bad paper. Much of which is inflated crappola.

- So we put in on the card and kick the can down the road a little further and leave it to our kids and grandkids worry about it. And the band played on.......

Monkey with the paper

When the U.S., and then the world's money economy started to crumble, the first thing capitalist economists could think of to do was to monkey with the paper. That's all they knew how to do. It was unthinkable that the tertiary virtual economy, that great backroom fraud of debt manipulation and fiat money, might have finally reached the limits of the material earth to support. That the money economy's gaming of workers and Mother Nature might itself might be the problem never occurred to the world's economic movers and shakers. It still hasn't. (Except for Chavez, Morales, Castro and Lula).

Jobs disappeared, homes went to foreclosure, and personal debt was at staggering all time highs. America's working folks were taking it square in the face. Not that economists or financial kingpins cared much one way or the other. In the capitalist financial world, everything is an opportunity. Cancer? Build cancer hospital chains. Pollution? Sell pollution credits. The country gone bankrupt? "Nothing to do," cried the mad hatters of finance, "but print more money, and give gobs of cash to the banks! Yes, yes, yes! Borrow astronomical amounts of the stuff and bribe every fat cat financial corporation up and down The Street!" All of which came down to creating more debt for the common people to work off. They seem willing enough to do it too -- if only they had jobs.

Along with the EU, Japan and the rest of the industrial world, the US continues to flood the market with cheap credit. That would be hunky dory, if was actually wealth for anybody but a banker. The real problems are debt and fraud, and tripling the debt in order to cover up the fraud. And pretending there no natural costs of our actions, that we do not have to rob the natural world to crank up the money world through debt.

~ Joe Bageant, "Waltzing at the Doomsday Ball"

[muriel_volestrangler]

32. Where have you pulled "he discovers that Barclays is not giving accurate information" from?

That's not in the WaPo story.

[KoKo]

42. Excellent quote from "Waltzing at the Doomsday Ball"..Joe Bageant

Sad we don't have his voice now...but, he nailed it in his books and articles.

Like Molly Ivans he had a way of expressing problems with a perception that few current writers or columnists can achieve.

Thanks!

[DeSwiss]

45. De Nada.

Joe is sorely missed.....

Excerpts from the book: ''Deer Hunting With Jesus'' - by Joe Bageant Video (2007)

"Folks seldom talk politics or current events except during the final weeks before an election and when prompted by lefty agitators like me, or grassroots neocon Republican operatives -- people who understand that the four cornerstones of the American political psyche are (1) emotion substituted for thought, (2) fear, (3) ignorance, (4) propaganda.

Why had the working class so plainly voted against their own interest? And will they do so again?

I am standing in the checkout line at the Food Lion. The lady in front is telling the clerk how her church rallied to buy her and Eddie a secondhand truck after theirs was repossessed: "It only needs a front tire and new brakes." "Praises be to Him!" exclaims the clerk, as if God had come down to personally deliver the 1990 Toyota himself. Obviously they are all born-again. The wife grabs up her purchases, a sixer of Diet Pepsi, a carton of Little Debbie Cakes, and moves on to the door.

Behind me are four or five other customers who could be their doubles, overweight, cheap clothing, looking as though they'd been shot at and missed, and shit at and hit, each of them with his or her own assortment of money, health and legal problems. The fact is, liberals and working people need each other to survive the growing economic calamity delivered to us by the regime that promised to "run this country like a business." The left must come face-to-face with Americans who do not necessarily share all of their priorities especially with Americans who have not been voting."

So I sit here watching fat Pootie in a T-shirt that reads: ONE MILLION BATTERED WOMEN IN THIS COUNTRY AND I'VE BEEN EATING MINE PLAIN! That this is not considered especially offensive says all you need to know about cultural and gender sensitivity around here. And the fact that Pootie votes, owns guns and is allowed to purchase hard liquor is something we should all probably be afraid to contemplate.

The Nazis gave the German people the Jews to hate. The Republicans have given the American people the gays and Muslims to hate."

~Joe Bageant -- "Deer Hunting With Jesus"

[dipsydoodle]

33. The general movements were down : not up.

Not that that justifies anything. However - that would have reduced the rate on credit cards and mortgages : not increased them.

Would you have preferred to have paid more ?

[DeSwiss]

44. The LIBOR rates where illegally fixed downward because.....

...they were reducing it for stock market speculators. That's who asked them to lower the rates. The general movement was down not to benefit us, they were moving it down for the benefit of their criminal friends. The Diamond/Dimons/Blankfeins of the world.

Who then later took those billions of low-rate dollars and pounds and lost the hell out of them gambling in that casino they call the stock market. So they lose what now amounts to trillions in bad bets -- that we the taxpayers are now expected to pay back.

- So we will ALL PAY MORE, in the end. Including my kids, and their kids, and their kids (ad infinitum).......

[dipsydoodle]

46. The movements were down to support their balance sheets

and not for any other reason. They didn't want their banks to be nationalised. The side effectof that reduced their profits. The beneficeries were traders who may have had advanced knowledge of likely movements up or down.

[DeSwiss]

48. Sure they were ''supporting'' their balancesheets....

...with criminal behavior, based on what I've read of the emails thusfar.

The LIBOR is supposed to reflect the ACTUAL interest rates that the banks charge each other. It is from this collection of rates from which the median of all bank rates are used to set (or ''fix'' as the Brits call it) the base point from which all other credit instrument's rates are set.

Barclays lied about their rates in order to favor investors in their credit instruments, stocks, bonds, etc. who requested Barclays see that the rates were at a specific level so that they could met their nut or make a killing using borrowed cheap money. There are emails showing on-going convos between brokers and traders on the floor of the FTSE asking for specific rates levels!!!

That. Is. A. Crime. Not. Supporting. Their. Balancesheets.

I'm through with this subject for now. I'll wait for the arrests and lawsuits.

Then we'll see........

[dipsydoodle]

47. And by the way

Barclays were fixed upwards during which time they'd have been excluded from the Libor calculation which uses the centre 8 of the sixteen banks only.

[Enrique]

21. I got that impression too

but on the other hand, in a sense he is drawn into the scandal because people are looking at what he did during that time and he is apparently providing newspapers with evidence that he tried to fix the problem.

[unblock]

3. how dare he try to solve the problem years before it became a scandal!

shame on him!

[DeSwiss]

4. Is that Justice I hear knocking???

- K&R

[truth2power]

11. Justice?? Never in our lifetime.n/t

[maddezmom]

5. shitty headline n/t

[MrMickeysMom]

7. Hey, I have to put the headline that the WaPo used...

... thus sayeth the mods.

[maddezmom]

10. hehe...there are no mods anymore just hosts

but you're right as far as LBN headline rules. And FTR, I don't see anything wrong with what Timmy did here.

[MrMickeysMom]

18. Well, to that, I'll just say that we should all keep following this...

Perhaps I'll be right about my view of his connection. I tend to think people who are in charge of the way money flows to the banks should be the first to whistle blow this bullshit.

Perhaps our MS press will "develop" what is already quite a story elsewhere.

[drm604]

12. But the OP gives the distinct impression that you think the article indicates he did something wrong

At the bottom you posted:

As if this really surprises anyone, right?

[MrMickeysMom]

15. I am and always have been suspicious of Timmy...

... This should not a big surprise... he should take his place among the rest of the suspects that flushed the American people down the drink, economically.

[BeyondGeography]

17. Just to repeat, totally bullshit headline

[MrMickeysMom]

19. What would your headline have been?

Just wondering...

[BeyondGeography]

23. Not playing

"Drawn in" implies he is part of the scandal. That is unsupported by the article itself, ergo, bullshit headline.

[MrMickeysMom]

25. "Drawn in"....

in my book means being associated with a scandal. The degree could have a number of outcomes. I think it will be should that he, and so many others LIHOP.

[midnight]

27. The $200 billion bail-out for predator banks and Spitzer charges are intimately linked

The prosecutors were coming after Spitzer for his Washington Post article:

“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.” Eliot Spitzer
http://www.gregpalast.com/elliot-spitzer-gets-nailed/


Oddly Spitzer's warnings were ignored and he was removed....Because he was the only thing standing between us and the banksters. No wonder they could manipulate the interest when ever...

[Hubert Flottz]

35. Geithner has cost Obama a ton of votes, IMHO.

Geithner should be fired.

[scheming daemons]

36. Trollish misleading headline notwithstanding....

...the actual article itself shines a positive light on Geithner.

He told Barclays how they should change how they do LIBOR rates.

And oh yeah....

"Thank you for your concern"

[maddezmom]

37. new WaPo headline: Geithner made recommendations on Libor in 2008, documents show

OP posted the original from WaPo.

[MrMickeysMom]

40. It suggests more...

One would have to re-read, and then check other lines of reporting not part of a contracted mainstream media.

You're welcome, but I would warn you that the headline is per guidelines and not to be associated with trollish behavior, which I'm pretty good at recognizing myself.

[WilliamPitt]

38. The New York Times has a non-shit headline for this story

"Geithner Raised Concerns on Rate Setting in 2008"
http://dealbook.nytimes.com/2012/07/12/geithner-was-aware-of-problems-with-key-interest-rates/?hp

The WaPo should be proud. One stupid headline released a torrent of dumb in this thread. Mission accomplished.

[MrMickeysMom]

41. Yep, that was a better headline, more information with the same conclusion...

Today apparently will shed more light on his his involvement. My intention, regardless of shitty headlines IS to shed more light...

"Mr. Geithner is not mentioned in the transcripts, a person briefed on the matter said who did not want to be identified because the investigation was continuing. But it is unclear if other documents will detail whether he had deeper knowledge of the issues with Libor, and what further actions — if any — Mr. Geithner took. According to the person briefed on the matter, New York Fed officials told regulators in Washington about the problems with Libor."

Not sure it's a good idea to conclude what is and is not dumb on this thread, because when the sun shines on something, it does it in the only way it can. Meanwhile, people may be a little more interested in this than how much of a tax break Romney got for his horse.

[KoKo]

43. Agree...those readers here who are informed on the financial

melt down (reading many international sources and in dept financial articles and books) will be more concerned about the continuing revelations of corruption in our Banking system that has affected us all.

[Octafish]

49. Barclay's received hundreds of billions in US taxpayer bailout money...

http://www.huffingtonpost.com/mobileweb/rep-alan-grayson/the-fed-bailouts-money-fo_b_1129988.html

[MrMickeysMom]

50. That was quite an article...

LOL... the "love child" of Alan Grayson and Ron Paul...

As has been commented up-thread, continued study of the "Too big to fail" institutions and continuing financial melt-down will reveal what happened as of 2008, but it's more important to understand HOW it continues to run amuck.

Beginning in the Reagan years, and in particular with the repeal of the Glass-Steagall act that blocked banks from being brokerages, we are looking at the mess NOT ONLY continuing to unfold, but I feel (and this relates to our Treasury under Geithner) HOW the Libor rates continue to be manipulated. If there were not continually manipulated, the explosion would happen instantaneously.

I guess time will prove my suspicion right or wrong. But, it should be obvious that we have continued to siphon money in our own financial system away, and for WHAT? Meanwhile, read that article of the only thus far examination of the Federal Reserve to see where ALL THE MONEY has gone... And, what must we do meanwhile?