Tags: Barofsky | Libor | Geithner | handcuffs

Barofsky on Libor: ‘I Hope We See People in Handcuffs’

By    |   Sunday, 29 July 2012 02:42 PM

Neil Barofsky, former inspector general of the TARP bailout, says perpetrators of the Libor scandal belong in jail.

And he excoriates Treasury Secretary Tim Geithner for his handling of Libor problems when he was president of the New York Federal Reserve Bank.

“I hope we see people in handcuffs," Barofsky tells Yahoo.

Libor stands for London Interbank Offered Rate, an interest rate off of which trillions of dollars of loans are priced. Banks manipulated Libor to increase profits and make themselves look healthier than they actually were during the financial crisis.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

As for Geithner, he told U.K. authorities that something funny was going on with Libor in 2008, as Libor is regulated there.

But the former New York Fed president didn’t inform U.S. regulators at the Justice Department, the Commodity Futures Trading Commission or the Securities and Exchange Commission.

Geithner thus allowed banks to believe "if we commit fraud, we break the rules, don't worry, we're too big. They'll never bring the appropriate steps against us," says Barofsky, who now teaches law at New York University.

“Geithner and other regulators should be held accountable. They should be fired across the board,” he adds.

The U.S. Department of Justice is preparing to file charges against traders from several banks in the Libor scandal. But U.K. prosecutors haven’t decided if they have a case.

“It’s partly the difference in culture,” Andrew Haynes, a law professor at the University of Wolverhampton in England, tells Bloomberg.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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