Tracy Alloway, U.S. financial correspondent at the Financial Times, and Jeff Madrick, senior fellow at the Roosevelt Institute, join “Viewpoint” host Eliot Spitzer to analyze what U.S. regulators might have known — and when — about the Libor manipulation scandal that has engulfed Barclays and may involve as many as 10 other major banks, including JPMorgan Chase and Bank of America.
Spitzer notes that Treasury Secretary Timothy Geithner, then head of the New York Fed, held a “Fixing Libor” meeting in 2008 (the phrase was actually written in his calendar). “The amazing thing about this entire story is that everyone seemed to have known there was a problem with Libor. The process of rate setting was completely subjective,” Alloway says. Whether banks actually colluded — and whether regulators knew about it and looked the other way — remains to be seen.
Madrick says the Libor scandal is just another indicator of a “culture of manipulation and acceptance of manipulation” on Wall Street. “Any idea any longer that one can trust bankers, or investment bankers, or mortgage brokers to do the right thing and set the right rate rather than make a very easy buck should be out the window,” he says.