- Feb 10, 2005
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- Montgomery, Al
US treasury secretary covered up banks’ rigging of global rates
By Barry Grey
16 July 2012
Documents released Friday by the Federal Reserve Bank of New York implicate Treasury Secretary Timothy Geithner in a cover-up of the rigging of the global benchmark interest rate, the London interbank offered rate, or Libor, by major US and international banks.
An estimated $800 trillion in financial products are linked to the Libor rate. These include $10 trillion in mortgages, student loans and credit cards. Some 90 percent of US commercial and mortgage loans are linked to the index.
By manipulating the rate upward, the banks robbed countless millions of people of billions of dollars in inflated loan costs. By manipulating the rate downward, they deprived states, cities, pension funds and retirees with fixed investments of untold billions in revenues from bond holdings.
The documents, requested by a subcommittee of the House of Representatives that is looking into the Libor scandal, show that as early as 2007 Geithner was aware that British-based Barclays and other banks were submitting false estimates of their borrowing costs to the Libor board in order to boost their profits and conceal financial problems. Geithner was president of the New York Fed from 2003 until 2008, when he joined the Obama administration.
The Fed documents, as well as documents released Friday by the Bank of England, also implicate Bank of England Governor Mervyn King and his deputy, Paul Tucker.