Adam Levitin | Geithner on Financial Crimes: The Dog Ate My Homework

Geithner on Financial Crimes: The Dog Ate My Homework

If I rob a federally insured bank and make off with $20,000, I’m facing years of federal prison time. If I defraud federal insurance programs, be they FHA or Medicaid, I’m also facing years of prison. If I engage in insider trading, I could also be looking at prison time (although that’s pretty rare).

But if I rig the most widely used interest rate index in the world, a leading bank regulator doesn’t think that the Department of Justice needs to be notified because they’re not part of the regulatory working group focused on LIBOR. That was Timothy Geithner’s explanation today as to why he didn’t notify the DOJ when he learned of Barclay’s LIBOR fraud. For real? What’s next? The dog ate my homework?

It all leaves me scratching my head. The harm from the LIBOR rigging is massively greater than any of the other financial crimes for which we send people to prison. Why wouldn’t the then head of the NY Federal Reserve Bank think that this was potentially a criminal matter? The “not part of the working group” is just about the lamest excuse I can think of. I don’t normally talk to the police, but I call them if I think there’s a crime in progress.

Rest here…


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