E-mails released by the Bank of England confirm that the Bank and the New York Fed—then headed by Tim Geithner—were very much involved in the cosmetic revision of the LIBOR rules enacted by the British Bankers Association (BBA) in December 2008. So much so, in fact, that they ordered that their fingerprints be erased before publication!
Referring to the BBA’s proposal on July 2, 2008, Bank of England Governor Mervyn King states: “I am broadly content with the approach described here.” He asked to be kept informed of future discussion on the subject. This statement was handwritten on a copy of the BBA proposal dated June 26, 2008.
A message on June 4, 2008, from Michael Cross, private secretary to Mervyn King, states: “I spoke to Bill Dudley of the Fed this afternoon. They are broadly content with the draft in that it addresses the specific points made in President Geithner’s memo.” In the same memo, Cross notes that “we might want to have direct and indirect references to the Bank (and the Fed) removed” from the BBA proposal. In an e-mail later that day, Cross says that King “agrees the BoE references should be removed, and replaced with ‘all interested parties.’” In an e-mail two days later to the BBA, Cross states: “Thank you also for removing the references to the Bank of England,” and suggests two minor changes to the wording of the proposal to further distance the central banks.
These e-mails clearly show the collusion between the Bank of England and Tim Geithner’s New York Fed, on the LIBOR scam. The language is politically correct, but their actions give them away. The deed’s the thing that catches this King, and Geithner as well.
Elements of this story were reported by the Independent July 21 (“Bank of England and U.S. regulators approved inadequate Libor rules”) and the Guardian (“Libor-fixing problems known at height of financial crisis”).
Keep up to speed with these rapidly moving events, both here and at LPAC.