Chancellor of the Exchequer, er, Treasury Secretary, Timmy Geithner, has fallen down the well…again. He’s probably wondering where the hell that hyperactive collie is when he needs her.
Timmy’s been down there before. There were allegations of excessive coziness with some of the most crapulent bankers in the biz before he was even confirmed. He failed to implement some of the simplest, most popular aspects of the bailout – like killing excessive executive compensation inflated by the fine job they did tanking the world economy. He’s stabbed his boss Barack in the back several times by publicly challenging him and outright refused to implement some Obama financial policies. With a SecTreas like him, who needs regulators cum lobbyists?
This time, the trip down the hole is over the LIBOR scandal that has ensnared 16 British, Swiss, and U.S. banks. The banks diddled LIBOR rates that control mortgage costs for fun and profit. Lots of profit. Like billions and billions of it. It turns out regulators on both sides of the Atlantic, including the top echelons of British government and then Fed Chairman Timmy knew about it back in 2007.
According to documents requested by Republican Rep. Randy Neugerber, Geither responded with some wimpy phone calls that went something like this:
“Hello London. We heard your guys have been playing some muy serioso financial hanky-panky. ‘Sup with that?”
“Oh my good chap, nothing actually. Just bankers being bankers I’m afraid. Pip, pip cheerio. Let’s do lunch next time you’re in London. We’ll put it on Barclays’ (the chief offender’s) tab. They won’t mind.”
“OK, just checking. Sounds good. Cheers!” Geithner might have said.
In addition to the phone calls, Timmy and the Fed took other swift action…a year later. The drafted a letter, passed along to the Brits, outlining 6 ways to fix the problem – 5 of which should have been, “arrest the skeevy thieves.”
But it wasn’t all milk and cookies. Geithner viciously clamped down on the situation by making a few phone calls and promptly letting the whole thing quietly bubble while the Brits did their part by doing nothing. That really showed those bankers who was in charge – unfortunately, it turned out to be them. Several months after the letter, a Barclays employee still called the LIBOR rates “absolute rubbish”, showing that the international finance community works like a well-snake oiled machine.
Today, the scandal still unfolds – largely out of sight of anyone who doesn’t read the Financial Times or the society column in the Wall St. Journal. Fines have been promised – possibly even unprecedented fines – that will be a tiny sliver of the amount stolen. Someone may even be threatened with prison before getting a big bonus and severance package equal to, or greater than the fines. After all, justice is blind, even if she does peek out from under the blindfold from time to time…for a fee. For his part, Timmy is just playing in the well until Lassie comes like Lassie always does.
This time, let’s just cage Lassie and let Timmy sink or swim.
Cross posted at The Omnipotent Poobah Speaks! More than politics, more than pop culture & humor