New York Fed to Barclays: 'Mm hmm'; If Libor-fixing is such a great scandal, why did Geithner and other regulators do so little?
The Federal Reserve Bank of New York released a trove of documents on the Libor scandal Friday, and the official Fed spin is that they show that regulators were "highlight[ing] problems" with Libor in 2007-2008, and "press[ing] for reform."</br></br>Well, let's see. In June 2008, Timothy Geithner, then head of the New York Fed, sent Bank of England Governor Mervyn King two pages of recommendations for "Enhancing the Credibility of LIBOR" and wrote that he would be "grateful if you would give us some sense of what changes are possible."</br></br>This is not exactly the language of a regulator who has just uncovered what we're now told is the financial crime of the century.</br></br>***</br></br>In the wake of Barclays's $450 million settlement with U.S. and U.K. regulators over attempted Libor-fixing, the political and media worlds are aflame with indignation that some banks misreported their borrowing costs during the financial panic of 2008. The U.S. Department of Justice let it out over the weekend that it is preparing criminal cases against individuals and banks in connection with the scandal. However, the evidence and testimony coming from regulators show they were well aware of price-fixing behavior at the time, but were not all that alarmed by it.