Former Gov. Eliot Spitzer of New York, no stranger to scandal himself, says the growing scandal surrounding possible fixing of the London interbank offered rate (LIBOR) by banks in Europe and the U.S. “is huge.”
"This is about as big as it gets in the financial world,” Spitzer told The Daily Ticker on Friday. “[LIBOR] goes to the heart of every piece of debt that's issued to consumers—your auto loan, your credit card debt."
As to accusations of Treasury Secretary Timothy Geithner’s possible involvement in the scheme going back to 2008, Spitzer said, “If you’re the president of the New York Fed [Geithner’s position at the time] and you think there is anything challenging the integrity of the LIBOR rate, alarm bells should be going off all over the place.”
When challenged about the possibility that Geithner sent a memo to regulators in London in 2008 warning of possible problems with LIBOR, and whether that then “absolves him,” Spitzer said, “We don’t know yet, I don’t want to jump to conclusions and more details will come out. I’ve been critical enough on Tim Geithner on substantive issues related to his regulatory strategies and theories. I like him as a person, so I don’t want to jump to conclusions.”
However, Spitzer added that “if there was no follow-up on [that], then I think there are very serious questions. However, if he then got pulled into the whirlpool of the financial crisis, then one can understand.”
Sptizer says that during Geithner’s confirmation hearings to be Treasury secretary, he said he “had never been a regulator.”
“Alarm bells went off in my head. The president of the New York Fed is the single most important regulator of our financial sector. He individually has more power and discretion than just about anyone else out there. So that statement worried me.”
Sptizer concluded by reiterating that he doesn’t want to "jump on” Geithner without seeing the paper trail.