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George Mason University professor Anthony Sanders on assisting the Senate in questioning the biggest manipulator of Libor.
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My pleasure.
This might be the most over -- financial fiasco in history.
So says our next guest who's been enlisted the help of the senate committee drum up questions for by Ben Bernanke and Tim Geithner antisense Saunders.
It's a professor.
James Madison University is so good to see you.
What is the central question then and -- -- that you would ask both Bernanke and Geithner does this even matter right.
While the first question they have to ask chairman Bernanke and Treasury Secretary Geithner is.
What did you know about us and as you've heard from the previous guests including -- Duffy.
That they're there they know that they knew some thing and the question what do they tell them to the instruct the banks saying hey.
Effect and you look at chart of Fed Funds rate vs Libor you can see that up -- told the financial crisis -- the Lehman Brothers collapse.
That they track almost perfectly.
So the Fed Funds rate was actually a great way to model Libor.
But after that that the whole Libor market as a pre discuss point out -- kind of evaporated.
So what rates where they actually putting in there that made any sense.
Question and again since mortgages for example arms -- all -- many were tied to Libor I just can't say.
Nothing's trading so -- economic generate thing today -- can't do that.
But what what what -- they instructed to do.
Did to the Fed or did the Bank of England over and sterling -- that they instruct the banks to take certain behaviors.
-- and the answers woman we've get done with a does that -- -- -- kinda -- Darryl I think there's much they can do about.
Would that that's the reason it didn't go back to the Federal Reserve and the need the reason that you would suggest that this is over hype is because the Fed ultimately.
Is the greatest manipulator.
Is -- not of Libor rates that it mean there's some outrageous rate manipulation that goes on any way that everybody got their -- and I'm not about this one.
One incidence.
Absolutely effect I challenge anyone to come up -- -- short term.
-- type rate that cannot be manipulated by central banks who whatever they come up with will be manipulated.
So the only question is do we what the Fed -- -- are we upset that.
Barkley is due to we have set that if an American bank does this and that they do it under the authority -- under the auspices of the Fed.
That's what they have to ask chairman Bernanke and S.
Treasury Secretary Geithner my point is is that it's not gonna matter whose central banks are gonna manipulate the heck out of these rates.
Anthony it was great to see you Anthony Sanders and by the -- -- yes -- Big -- traded from James Madison and George Mason first -- got to draft.
Excellent.
And it's -- to -- at stake areas out -- well.
