A criminal probe into Libor rate manipulation scandal is underway as the Justice Department is zeroing in on potential criminal wrongdoing by bankers connected to the rate rigging scheme. Federal authorities are building cases against a number of firms and charges against at least one of these banks may be on the way later this year.
But the question remains as to whether the Justice Department can prove a criminal case beyond a reasonable doubt that the nefarious bankers intended to manipulate the rates and that they colluded to do so. Another emerging angle is that the former head of the New York Federal Reserve Bank of New York, Timothy Geithner, supposedly may have known about the rate rigging scheme as early as 2008. And the New York Fed may have tipped off other central bankers across the global capital markets.
However, combined news sources report that Senior British officials deny they were warned about possible rate rigging by the New York Fed. “At no stage did he or anyone else at the New York Fed raise any concerns with the Bank that they had seen any wrongdoing,” said Mervyn A. King, governor of the Bank of England. “There was no suggestion of fraudulent behavior. ”
In sum, this scandal has a number of angles: how many money center banks will be hit with big civil penalties and whether other executives will be purged; whether or not the Justice Department has enough evidence to bring criminal charges; and lastly, how much did central bankers know and when did they know it.
And the last angle begs the question as to whether federal authorities failed to police the banking system again. In any event this could very well be the biggest scandal to emerge from the economic crisis of 2008.
