Something Stinks

Ben Bernanke was testifying in front of a Senate Banking Committee yesterday (see: Miami Herald Article) and he was squirming.  He looked and acted chagrined when the subject of the recently disclosed manipulation of the Libor (London Interbank Offered Rate, a key worldwide interest rate benchmark) that has cost the Chairman and CEO of Barclays Bank their jobs.  It also probably has cost numerous players in the financial markets over the last four years billions, maybe hundreds of billions of dollars ... all because of illegal manipulation of this rate.  And, it seems that the Federal Reserve Bank of New York was on to this scandal as early as 2008 and possibly earlier.  This was when Little Timmy Geithner was running the New York Fed and Bernanke was running the whole Fed Reserve Banking shebang.  Their failings were obvious because, with a few phone calls, these two men could have, and should have killed this monumental malfeasance in its tracks.  But, it appears, they chose to emulate Penn State's Joe Paterno by conveniently looking the other way for all these years.  To me this is shameful behavior and emits a miasma that is not befitting of Bernanke.  Given Little Timmy Geithner's past tax peccadillo's, his lack of decisive action here does not seem out of character.

The feeble excuse that Bernanke offered was that such manipulation allowed these banks to appear, in 2008, financially stronger than they really were (a good thing?).  This then morphed into clear criminal behavior.  What good are regulators if they don't regulate?  Today Little Timothy Geithner also testifies in front of Congress and I expect him to be his old elusive self.  And when this scandal fully erupts (see: WSJ Article), I hope that, this time, these rats cannot run down the hawsers to their East Hampton and Martha's Vineyard get-aways.  I strongly suspect that they need to be fitted with some black and white stripped overalls and given an extended vacation in Leavenworth.  And don't be surprised if Congress's response is to demand more regulations ... quickly echoed by Elizabeth (Pow Wow Chow) Warren.