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

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

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

Credit Slips-

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.

So perhaps Geithner simply didn’t think the wrongdoing was criminal or even potentially criminal. How is that possible?  My hypothesis is that it simply isn’t comprehensible to Geithner that senior executives in financial institutions could be engaged in criminal behavior. Criminals don’t wear suits.  They use six-guns, not fountain pens. Perhaps many bank regulators are simply too cozy with bankers to see them as even potentially criminal. They might have gone to college together. They interact regularly and their careers are intertwined.  They may be part of the same social milieu and may even socialize. Institutions might get fined (without admitting any wrongdoing), but criminal penalties?  Not for these kind of people.  

[CREDIT SLIPS]

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One Response to “Adam Levitin | Geithner on Financial Crimes: The Dog Ate My Homework”

  1. Guy_Fawkes says:

    If Geithner wants to “pal around” with these criminals…..I have a great idea. Give ’em all a nice uniform of orange and let them hang at the same lunch room table.

    That, or they can hang from the same lamp post.

    It’s an either/or.

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