US Treasury Secretary Timothy Geithner will take the hot seat on Capitol Hill today as he is questioned about the ongoing LIBOR scandal. As former head of the New York Federal Reserve Bank, Geithner apparently did not notify banking regulators adequately about the alleged rigging of the London Inter-Bank Offered Rate by Barclays Bank in the UK. The LIBOR rate has been an essential benchmark for setting interest rates on everything from home mortgages and car loans to business and consumer credit. The questions to be raised today in Congressional hearings is what exactly did Geithner know and do in regards to the LIBOR rigging back in 2008? Did Geithner withhold, or even obstruct investigations by the Justice Department and the Commodities Futures Trading Commission at that time?
Last month, Barclays was fined $450 million dollars for its role in the LIBOR rate rigging. Barely a slap on the wrist considering the sums of money involved. In June of 2008, Geithner, as head of the NY Fed, did send a six-point memo to banking officials in the UK expressing concerns about the ″integrity″ of LIBOR. Newly released documents show that the New York Federal Reserve Bank received information from a Barclays employee about the LIBOR rigging in April of 2008.
So what exactly did Treasury Secretary Timothy Geithner know and do about the rigging of LIBOR rates? The evidence to date seems to suggest that while serving as chairman of the New York Federal Reserve Bank, Geithner was either silent, or less than forthcoming in providing information to authorities of the Bank of England, as well as to our own Justice Department. The is no doubt that high-level managers of the NY Fed knew that there might be serious issues with Barclays Bank in regards to rigging LIBOR interest rates. Geithner is about the last major economic adviser to Barack Obama left after Obama took office in 2009. The rest of Obama′s economic staff have all left.