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FBN's Charlie Gasparino discusses the questions Timothy Geithner will be asked before the House Financial Services Committee on the Libor scandal.
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So much.
So what Timothy Geithner know about the Libor scandal and when exactly did he know it does will be some of the questions that he's gonna face of the house financial services committee hearing this Wednesday.
The hearing originally meant to cover the Dodd-Frank financial reform wobble now.
Feature questions concerning his response -- Libor rigging scandal.
When he was New York fed president Charlie Gasparino is following the story and he joins us now -- dynasty al-Qaeda.
Interest.
To William Dudley -- now the president of the New York fed when the Libor ring scandal went down it was Timothy Geithner was the president.
-- a present between 2000 -- 2000 before he went to treasury that's when the New York fed knew about Libor rigging Geithner actually wrote kind of have been.
Bizarre memo which called that on this report whatever was it's now considered fairly -- I guess.
Illegal might be a pretty safe term back -- he didn't take much of.
Didn't -- didn't take much action.
That's the questions that he's going to be yes -- -- believe this Wednesday and you could see that foreshadowed in the letter today.
From the house financial services committee to -- -- -- was the chairman at the time so he was still kind of tangentially involved.
Interesting enough they're gonna ask at least according -- -- -- because they SW about this any communications.
Between.
The New York fed and the Justice Department.
That's going to be a key thing why.
It's so clearly illegal.
They were -- -- Europe Libor.
Maybe -- -- doing -- for the best of reasons -- this is a financial crisis you kind of want to keep rates low -- -- time and.
You know -- is set because banks submit their own bar -- -- which were rising.
It's kind of an interest in we look at attitude government really doesn't have an impact.
On Libor as it does with the Fed Funds rate it's the banks themselves that essentially.
Have that power and potentially the power to -- so what he's going to be asked I believe it's foreshadowed his letter.
Why did you call the justice apartment and we know and the US we're gonna give it wouldn't what you don't we just finished why -- you why didn't you call the Justice Department.
When you were given specific specific information.
That illegalities we're going on and -- tea.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- This the Fed had the opportunity to release all the communications -- regarding Libor.
Couple weeks ago which kind of detailed.
The steps that Geithner took they -- not release a communication between.
Geithner and the Justice Department they released communications between he mainly alerted the Bank of England.
Now -- dealer to Bank of England Libor set in the UK by UK banking group theoretically.
The Bank of England is that is that is the primary regular I will put out this some of the other firms involved in the rigging scandal.
If the Barclays Barclays Capital is regulated by the New York -- abided by the New York fed so was chase JPMorgan which is also.
Involved in this month's anybody's guilty but clearly -- being investigated and so -- so this is a pretty big thing I think Geithner is going to be asked about his lack of response.
And you know -- it may be -- Justice Department.
You would think by now we -- found that out you know that you know we we and I think that's the one of the problems Geithner.
And one of the problems of the New York fed at and I tell -- This gets back to the systemic problem with the New York fed particularly -- the Tim Geithner while he was that of the New York fed.
Monitoring all the big banks or those big banks went out and they they went out and they went on -- gambling spree.
Buying all the lose all these toxic mortgages but -- Citigroup created structured investment vehicles suits so they can put.
There they're their toxic assets off balance sheet and -- pocket that was -- under the New York Fed's nose so not only did he missed that.
Well apparently you missed this as well and they're going to be asking why anything in his communications Charlie that shows that the banks were fearful of perhaps a run on the bank its -- of the financial crisis everybody's scared so that.
We you know this is going on their -- Libor but it was -- Because mitigated and he at all -- it was an -- sure that's why the New York fed looked the other way I mean if you get it I mean this -- this one of interest rate the government -- that that I know.
One major interest -- that I know that the government cannot impact.
And that's the Fed Funds are -- that's the that's Libor and it's a very big interest rate you think about it.
Everything is set off -- -- the problem is why have a Libor.
If it's if it's gonna be made up it has -- air -- out there and by the way why would the Fed -- knows it was made up.
Why would they they they faced also the journal -- an interest in editorial today.
Where they showed how many times have been some of its -- it does some of that the the sort of post financial crisis.
Actions -- took where at a price certain instruments it was pricing a lot that's up -- Libor why wouldn't do it if he knows it's a phony rate.
Good questions asked and banks sorry Charlie Gasparino thanks so much of living at -- something to consider is --
