My, it was awfully nice of Marcy Gordon at the Associated Press, aka the Administration's Press, to give Treasury Secretary Tim Geithner such excellent protection in her report on the New York Federal Reserve Bank's release of documents relating to its knowledge of the manipulation of the "Libor" (London interbank offered rate) used as the basis for the pricing of trillions of dollars of loans.
Her report's second paragraph only tells readers that Geithner, "who was then president of the New York Fed, urged the Bank of England to make the rate-setting process more transparent." What a helpful guy. Readers needed to go to Paragraph 12 to see more about Geithner, and even that information was given kid-glove treatment:
On June 1, 2008, Geithner sent an email to Mervyn King, the head of the Bank of England, urging the British central bank to change the way the LIBOR is calculated.
Internal New York Fed reports also show regulators were concerned about the accuracy of the LIBOR rate. And in a June 5, 2008 report to a group of U.S. federal regulators, analysts at the New York Fed cited possible misreporting of the rate.
While Geithner expressed concerns to the British central bank, it wasn't until last month that U.S. and British regulators won a settlement with Barclays and imposed fines.
It isn't clear why Geithner didn't make his concerns public after he sent the email in 2008.
Treasury spokeswoman Natalie Wyeth declined to comment on the subject Friday.
Gordon's third paragraph is vague about Geithner's "concern." Was it over the way the rate's calculation or the misreporting? Inquiring minds want to know; it would appear that Gordon doesn't. She also didn't seek out any industry experts for their take on the situation.
Bloomberg News says it's both:
Petrou said (congressional) lawmakers (at upcoming hearings) are unlikely to be satisfied by a memo showing that Geithner recommended changes to the way Libor rates are calculated to Bank of England Governor Mervyn King in June 2008.
... Geithner wanted procedures to prevent “misreporting,” and the BBA, which was reviewing Libor, said it would take the recommendations on board. He sent the memo to King after the two discussed Libor at a meeting of central bankers in Basel, Switzerland, the previous month. Geithner was succeeded by William C. Dudley at the New York Fed in January 2009.
If you're looking at ways to prevent "misreporting," you're probably not concerned about a theoretical problem but an actual one. Geithner's knowledge of misreporting would indicate that he knew that untold billions of dollars of adjustable-rate mortgage loans closed in previous years were underpriced, meaning that many borrowers who shouldn't have been approved were approved, and that the chance of large-scale defaults was even greater than already feared.
Good job of hiding all that from your readers and subscribing publications and broadcast outlets, Marcy. Your bosses at the Associated Press, aka Administration's Press, aka the Administration's Protection, must be really proud.
Cross-posted at BizzyBlog.com.