Timmy! is deeply offended by SIGTARP Barofsky’s assertion that he was too close to Wall Street while he was head of FRBNY. In related news, Geithner defended himself against allegations that he had not been sufficiently aggressive in his handling of the LIBOR situation:
“We, at least I, first learned about those concerns in the early parts of spring of 2008 and we acted very quickly at that stage. At that time, this is in the spring of 2008, we took a very careful look at these concerns, we thought those concerns were justified,” Geithner said.
“And we took the initiative to bring those concerns to the attention of the broader U.S. regulatory community, including all the agencies that have responsibility for market manipulation and abuse,” he said, citing a specific meeting of the president’s working group on financial markets.
The first trove of documents from the New York Fed showed that Barclays had flagged concerns as early as 2007 and Geithner sent the email to Bank of England Governor Mervyn King in June 2008 with the Libor recommendations.
So let’s review the timeline:
- In August, 2007 Barclays admits to FRBNY personnel that it submitted misleading LIBOR quotes, and claims that this practice is widespread.
- In April 2008 the WSJ runs an article providing evidence that banks were systematically underreporting LIBOR rates.
- In June 2008-AFTER the WSJ article-FRBNY sends a letter to the BOE suggesting procedural and governance changes to LIBOR in order to reduce the incentive to misreport. This letter says nothing about Barclay’s admission that it had in fact misreported LIBOR 10 months earlier.
- BOE does nothing. FRBNY does nothing. FRBNY does not follow up when BOE does nothing.
So I guess we now now what “all I could” means in Timmyspeak.
I would have more respect for Geithner had he said: “Given the state of the banking system it would have been catastrophic to pursue aggressively misreporting of LIBOR.” The weaseling-not so much. That is truly offensive. (The “We, at least I, first learned” weaseling is particularly offensive. Just where did the buck stop at FRBNY?)
Incidentally, the NYT has turned on Geithner for his role-or lack thereof-in cracking down on the misreporting. Moreover, it has come out in support of Gary Gensler as a replacement for Geithner, in the event of a 2d Obama term:
And when the time comes to choose a new Treasury secretary — Mr. Geithner has said he does not expect to remain if President Obama is re-elected — the next president would do well to look for candidates among the regulators who have distinguished themselves by their willingness to confront the banking system’s manifest problems. One such person is Gary Gensler, the chairman of the Commodity Futures Trading Commission, which pursued the rate-rigging allegations against Barclays, securing a record fine and referring the matter to the Justice Department for criminal investigation.
A couple of things. First, the CFTC acted almost five years after the initial information came to light: that’s confrontation? Second, has the NYT maybe like heard of MF Global? Peregrine?
Admittedly, a Gensler Treasury would probably be well down on the list of debacles in the event of Obama’s reelection. But a debacle it would be, and the LIBOR case-in which the CFTC worked with DOJ and the BOE-is hardly sufficient grounds to justify Genlser’s elevation, especially in light of the two confidence-shattering, and unprecedented, breaches of customer fund segregation that occurred on his watch.
But then again, DC has always been a living, breathing, pulsating embodiment of the Peter Principle, so it just might happen.