In the summer of 2007, as storm clouds gathered over the world’s financial system, then-New York Federal Reserve President Timothy Geithner allegedly informed the Bank of America and other banks about the possibility the U.S. central bank would lower one of its critical interest rates, according to a senior Fed official.
Jeffrey Lacker, the head of the Richmond Fed, originally raised the allegation during a Fed conference call in August 2007, and he stuck to his 5-year-old claim against the current U.S. treasury secretary in a statement provided to Reuters on Friday.
But of course the above is a nine-day-old story and no one important has raised a peep about Geithner’s ‘crime’. Looking at the mainstream media, well … Ryan Chittum of the Columbia Journalism Review observes incredulously (link in original):
The New York Times gives this big story perfunctory coverage, downplays it as a “tiff” in the headline, and stuffs it inside the paper. The Wall Street Journal, the Financial Times, and Bloomberg haven’t even touched the story.
I mean, what? You have a Fed president accusing the outgoing Treasury Secretary—one loudly criticized for his closeness to Wall Street—of giving bankers critical inside information, and you’re not going to even flag that?
Chittum cites Zero Hedge as the first to notice the accusation in just disclosed Fed committee minutes, and acknowledges that only Zero Hedge has actually advanced the story to what would seem more red-handed criminality by numerous banking executives, in that those tipped by Geithner acted on his inside information. Chittum writes that Zero Hedge noticed the Lacker takedown of Geithner “came at about 6:15 p.m. on August 16, four hours after stocks had jumped a stunning 4 percent in the span of sixty minutes.” He then quotes Zero Hedge:
Many shorts ended up being carted out of the front door that day, unsure what has just happened. Sure enough, the next day at 8:00 am the Fed did what it had decided the previously it would do, and announce the 50 bps cut to the discount rate to fed funds rate spread…
…the S&P futures moved from a low of 1320 (and 1330 at the 2:00 pm moment that the market saw a mysterious “invisible hand” pushing it higher), all the way to well over 1410 the next day: an unprecedented 90 ES point move in a few hours!
Zero Hedge concludes by crushing all hope with the following observation:
Maybe there is a reason why the Fed has a 5 year delay in disclosing full transcripts. Because something tells us the statute of limitations on pursuing Fed inside information disclosure charges against the soon to be ex-Treasury Secretary will have just expired.
Props to RT’s Max Keiser for his show, which detailed the criminality. Of course, as Max said, Geithner’s acts were actually ‘just’ another ripping apart of the social contract and not criminality, because by design the Statute of Limitations has apparently expired. Damn, post-democracy sucks.
P.S. Here’s the August 16, 2007 conference call transcript:
GEITHNER: Although (the banks) had lots of clarification about what is permitted now under current policies at the discount window, they obviously don’t have any idea that we’re contemplating a change in policy or what might be possible and what we might say or not say going forward…
MR. LACKER. Vice Chairman Geithner, did you say that they are unaware of what we’re
considering or what we might be doing with the discount rate?
VICE CHAIRMAN GEITHNER. Yes.
MR. LACKER. Vice Chairman Geithner, I spoke with Ken Lewis, President and CEO of
Bank of America, this afternoon, and he said that he appreciated what Tim Geithner was arranging by way of changes in the discount facility. So my information is different from that.
CHAIRMAN BERNANKE. Okay. Thank you. Go ahead, Vice Chairman Geithner.
VICE CHAIRMAN GEITHNER. Well, I cannot speak for Ken Lewis, but I think they have sought to see whether they could understand a little more clearly the scope of their rights and our current policy with respect to the window. The only thing I’ve done is to try to help them understand—and I’m sure that’s been true across the System—what the scope of that is because these people generally don’t use the window and they don’t really understand in some sense what it’s about.