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Nassau County, NY Comptroller George Maragos on the impact of the libor rate scandal on his county’s government.
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Was being manipulated.
With more on the story the interest rate manipulation scandal having a local impact now in states Barclays traders in London.
-- the lending rates for trillions of dollars in credit all over the world even maybe on your mortgage.
Next gets -- calculations by my next guest calculations the scandal may have cost his New York -- Tens of millions of dollars joining me now Nassau County comptroller George America's George great to see you thanks for coming Eric -- -- -- having me now.
Tell me how your county could get caught up in this thing.
What we took out -- 2004.
About 600 -- didn't I'm sorry million dollars.
In that variable rate debt that then we proceed -- -- the administration about time proceeded to kind of protect by buying these should swaps.
And they in turn it.
In in a sense it worked out very well.
But in essence we ended up the county ended up overpaying about thirteen million dollars over the five year period so -- -- -- to -- interest rate swap is a derivative.
And -- you would have been trying to protect yourself from interest rate risk.
By buying this that's the very thing that you're trying to pay for with the very thing he did not get -- still got some benefit in terms of -- that that variable rate converting a variable rate bonds.
To a fixed rate so we did get that benefit but we over -- and we overpay to the tune of thirteen million dollars out of that make you feel.
Well IA -- we wanted to -- our money back we want the taxpayers but money back and that's what we will be asking in the lawsuit that we're contemplating filing next week.
He ever filed it yet.
-- filed against the bank this'll do the swap while the added back association the Interbank at the London Interbank that basically and the banks behind rate that's at the right.
It's our right so you're not just one county doing this -- counties all over the country.
Municipalities.
Who are thinking about doing this Baltimore right here is already filed suit -- -- a lot of people in their -- How big is this thing gonna get do you think.
It could be in the hundreds of billions of dollars I would imagine that most counties that we're financing.
Their debt back in 20034.
And -- Would have entered into this is similar swap arranged.
Us now this is just yet another burden -- on banks as you know they've had to have settlements over -- that issuing mortgages and their practices that alongside that.
And lots of concerns about that that actually resulted in Dodd-Frank law's.
To constrain the way they do business now this.
You have to wonder what the ultimate impact on banking is going to be do we need to be worried about some of these large institutions.
You know when all this trouble started they were too big to fail now they're even bigger what do you say.
-- the different the whole financial system red dress on credibility.
And I think I didn't you know to be this is another example with a credibility of the banks and our financial institutions.
Has been damaged and it's very important that they take steps to reimburse those counties in governments and organizations that have been affected.
Without lengthy lawsuits in court.
-- -- a lot of people gonna look at this thing and it's say look at -- county lots of cities municipalities other counties out there who would be silly.
Over this they have financial problems are they just looking for a scapegoat somebody to give them some cash because they're having financial issues what do you -- I don't all we're only looking to you know to be to recover what we -- overpaid.
And we would be very happy if the banks who -- a check tomorrow.
For thirteen I'm not a lot of luck they can't you go away went over the fact that -- You don't want punitive damages you just what your money back we can have a check next week we have we take it well.
And it will be interesting to see if you get your money back George thanks for coming -- -- really appreciate your time.
