Tim Geithner Admits Banks Bailed Out With Rigged Libor, Costing Taxpayers Huge Amount

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Tim Geithner Admits Banks Bailed Out With Rigged Libor, Costing Taxpayers Huge Amount

Tim Geithner Admits Banks Bailed Out With Rigged Libor, Costing Taxpayers Huge Amount

Where are the handcuffs?

HuffPO-

Timothy Geithner claimed on Wednesday that the government had no choice during the financial crisis but to lend to banks and AIG using an interest rate, Libor, that everybody knew was flawed.

Call it a back-door bailout: By using an artificially low Libor, the government saved the banks and AIG millions, maybe billions — and cost the taxpayers the same amount.

The use of Libor in the bailouts also rubber-stamped that hopelessly manipulated interest rate as a market measure, raising still more questions about just how worried Geithner and other regulators really were about it.

In a House Financial Services Committee hearing on Wednesday, Treasury Secretary Geithner was asked why Treasury and the Fed used the London Interbank Offered Rate as a basis for loans to insurance giant American International Group and to U.S. banks under the Term Asset-Backed Securities Loan Facility — even though Geithner and other regulators had long suspected that Libor was artificially low, as Geithner testified.

[HUFFINGTON POST]

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