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British scandal yet another reason to fire Secretary Geithner
September 10, 2012 - Mike Maneval
Mark Gangloff, chief financial writer for Huffington Post, provided the latest in reasons why Secretary of the Treasury Tim Geithner should be fired last Tuesday.
Gangloff listed warnings from finance industry insiders going back to the early and mid-1990s that the London Interbank Offered Rate was being manipulated. As I noted with this blog in early July, the fraud was perpetuated to obscure greater risks and guarantee bank profits. Investment management CEO Richard Robb warned the Commodity Futures Trading Commission that the manipulation was, in his words, "easy to see ... coming" back in 1996. A Morgan Stanley trader as far back as 1991 said the manipulation was par for the course, and in 1998 a Federal Reserve analyst cautioned of the strong possibility of LIBOR manipulation.
Gangloff goes on to scoff over Geithner's claims of obliviousness, while noting that after 2008, when Geithner concedes he was finally aware of the manipulations and pushing back against them - after Barclays traders admitted to the fraud - that Geithner merely wrote a single memo to British banking interests without any follow-through. Actually, to say Geithner didn't follow through is too generous, in that Geithner's Treasury Department then used the fraudulent numbers from LIBOR to set bailout terms for AIG and other banking interests.
While the realities of politics likely - and shamefully - mean we're too close to an election for President Barack Obama to sever his administration's ties to the detrimental treasury secretary, he should. It would be in the United States' best interests to remove a public official about whom Gangloff can only say his possible indifference to manipulation of interest rates is, in Gangloff's words, "an easier position to defend than simply claiming total ignorance." In either case, America deserves a better treasury secretary than one ignorant or indifferent to widespread corruption.
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