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Former Dallas Federal Reserve vice president Gerald O'Driscoll weighs in on the investigations into the Libor scandal.
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Will be something that might come up.
What's coming up today from the reporting of Fox Business Network -- Charlie Gasparino exclusively.
That house staffers are considering now.
Swearing in the Treasury Secretary Tim Geithner during his testimony and next week that could be quite a picture typically the committee does not swear in all participants our next guest meantime says the Fed Chairman Ben Bernanke's answers.
Come to lawmakers about this rate fixing scandal.
We're disingenuous of former Dallas fed pres vice president -- Driscoll joins us how so mr.
Driscoll how how are they disingenuous.
Well I mean he suggested that the Fed could do anything when they found out that something was amiss with the Libor rate going back to Kuwait I think.
And first -- -- investigated it.
And secondly they have a lot of power and there's a lot of ways they can guide firms that they think are not doing something that's correct.
And -- All dramatic one would simply say you know if you guys are -- reporting this right we can't have -- primary dealer committing financial fraud so we'll kick you off the primary dealer network got to get their attention.
I'm -- -- what now the question for Geithner all the questions for Tim Geithner as Treasury Secretary now but then.
Back then president in New York Federal Reserve yet we make number one -- troll is reporting that -- -- -- I don't know.
And be quite a picture I guess on television and then we should -- -- yes we know we wrote a memo but a lot of people say memo should -- more than that.
-- you know what remind you -- The Bernie Madoff affair with the SEC they hand to hand them the information that suggests the fraud might be going on.
And they still can't find it Rai from hear no evil speak no evil and see no evil.
I think they should ask him what he do you know and when did he know it and why -- he follow up.
What about the system because that's what it's all gonna come down to at some point wants -- whoever committed a crime and it crimes are committed is punished.
Once we get to the bottom of what regulators knew when there reprimanded if they aren't some -- people are gonna say is this system make any sense because.
We've talked about a lot but it essentially what they do is they ask these banks a question every morning they say at what rate would you but could you borrow funds for you to do sell.
By asking for and then accepting Interbank -- is in a reasonable market size just prior to 11 AM that's literally the question everyday.
Now they're not as I did yesterday the point -- lots -- also just make up an annual rate of just say this post honestly answer the question this -- reports something accurately.
However but some system right -- -- relying on the honor of these these people to report an accurate rated -- something better doesn't there or and if so what is it.
Well I look.
-- It did it built in incentives to -- report.
In different directions at different times.
And it was very suspicious during this whole financial crisis when nobody could borrow that they were reporting was it would have been very cheap to borrow that.
That should have set off alarm bells.
Should we -- what should we change in India of a better idea are.
I'd I think it should only be actual transactions.
If they don't have a transaction then that's very revealing if firms -- borrowing it's a very revealing.
Right and that's the kind of thing we're gonna go now that's the kind of thing that is is really gonna take some time -- think to sort out after all the investigation -- terrible Driscoll a former Dallas fed.
Vice president senior fellow these days at the Cato Institute thank you very much.
