Treasury Secretary Timothy F. Geithner sounded the alarm to regulators about the manipulation of interbank interest rates. But Geithner, who four years ago was head of the Federal Reserve Bank of New York, never mentioned it in the key meetings with the top regulators that the British bank Barclays admitted to the Fed itself of tampering with Libor.
This is reported by the American site Washingtonpost.com.
Meanwhile, regulators at the Commodity Futures Trading Commission and the Justice Department were working largely without help from the Fed in the case against British bank Barclays. That case culminated in a large-scale scandal that rocked banking institutions around the world.
Today Geithner will speak at the Capitol (Capitol Hill), and is already ready to receive criticism from both the right and the left: in fact, a key issue will have to be addressed: he and his staff intervened in time to stop the fraud implemented by Barclays and from other banks? In short, does the Fed really have anything to do with this scandal?
Geithner's answer seems obvious: "we did everything we could." And in an interview with Charlie Rose he specified: "we immediately pushed the British to contact the American authorities so that they could analyze the matter properly, which they Done." And he adds: “they have done well so far, but there is still a lot of work to do”. Documents released by the Federal Reserve show that the firms chose to focus on the structural problems with Libor rather than help expose corruption at Barclays and other banks.
And Mervin King, the governor of the Bank of England wonders: “Didn't Geithner or one of his Fed aides raise concerns with the Bank in case they saw something wrong?”
Geithner was undoubtedly aware of the wrongdoing at Libor, but the documents have not yet revealed whether he knew of the numerous phone calls in which Barclays employees had admitted to the Fed of the manipulations of the British bank on Libor.
In an April 2008 telephone call, a Barclays employee admitted to New York Federal Reserve executive Fabiola Ravazzolo: “After three years, again in October a Barclays executive told a Fed employee that Libor was living in air and garbage".
In the spring and summer of 2008, as the global economic crisis began, the Fed investigated what was wrong with Libor.
Two weeks after the aforementioned April 2008 phone call, Geithner held a meeting called "Fixing the Libor." with senior Fed staff members. A few weeks later in a meeting with US Treasury and Fed staff, including Ravazzolo, they showed slides with "issues regarding the accuracy and importance of Libor." Then, on June 2008, XNUMX, Geithner emailed King, the governor of the Bank of England, about how to set rates. The Fed also admitted that it raised the Libor issue in a meeting at the time.
Two sources close to the investigation, however, say they have never heard the Fed investigate Libor.
The spokesman for the US Treasury Secretary referred the question to the Fed, which however did not comment.
But the Fed was not sure in 2008 whether or not Libor was being manipulated. “It was difficult to establish the veracity of the claim in a June 5, 2008 presentation.
However, the US Federal Reserve still seems to intend to use Libor as a parameter to determine how much the insurance giant American International Group could finance the government in the event of a bailout, as in 2008.
In fact, Libor is of fundamental importance for Americans: it would allow us to establish interest rates for trillions of dollars for student installments, loans, loans, etc.
Precisely because of this importance, Congress is putting pressure on the Fed to put a stop to the manipulation of the Libor.
While in America the Geithner case and the Fed hold the stage, in Europe we think of the Deutsche Bank.
In fact, according to the Suddeutsche Zeitung, he published an article on a Bafin report concerning the German bank (Deutsche Bank).
Indeed, it would appear that the bank has demoted four of its employees and two other employees have left Deutsche Bank.
But the report will focus mainly on the superiors of these six German bankers, whether they are also involved in the "upper floors" or not.
Supervisory Chairman Paul Achleitner said German bank CEO Anshu Jain had no involvement in the internal scandal at Deutsche Bank.
