In 2008, while President of the NY Fed, Geithner sent a memo to British regulators to raise concerns about potential manipulation of LIBOR, as has been widely reported and confirmed Friday by the NY Fed.

The question now is why Geithner didn't do more to follow up on that memo, considering the central role LIBOR plays in the financial markets. Literally hundreds of trillions of dollars of financial instruments -- including complex derivatives but also basic consumer loans are tied to LIBOR, technically the London Interbank Offered Rate.

The LIBOR scandal is "so big I don't think people have got their minds around it," says Jim Rickards, a partner at JAC Capital Advisors and author of Currency Wars: The Making of the Next Global. "This is the largest financial scandal I've seen in my career."

We tend to agree. People like Geithner (bright but socially and ethically clueless globalized econo-gov managers) probably think they are being "useful" by doing what Geithner did when he witnessed the LIBOR crime and sent a "helpful set of suggestions" to his British colleagues. But that isn't enough: as a public official in financial regulation he should have, and had a duty to, report the crime and refer it for prosecution. So what looks like it counts in his favor as "helpful" is actually evidence that he knew enough to know better about what should be done.

It actually bears a lot of resemblance to the Penn State pedophilia scandal, now that we think about it...

Comments: Be the first to add a comment

add a comment | go to forum thread