Former New York State Attorney General and Governor Eliot Spitzer appeared on Friday on CNBC's Maria Bartiromo Dealbook news show, and challenged Treasury Secretary Tim Geithner to come clean on what he knew and what he did about the Libor rate rigging while he was President of the New York Fed and later as Obama's Treasury Secretary. CNBC headlined the interview on its website, "Eliot Spitzer Is Willing To Suspend Judgment Before Determining Whether Or Not The New York Fed Let Barclays Molest Young Boys."
Asked by Bartiromo whether Geithner had done enough by flagging the Barclays Libor rigging revelations to the Bank of England, Spitzer replied, "This is something that needs an awful lot of examination. I think the fact that he knew in '07, sent a memo in '08 is only the first layer of inquiry. Did he follow up on it? Libor, as everyone who watches CNBC knows, is the heart and soul, it is the bloodstream of the financial system. If anyone is rigging it or playing games with it, then you must follow up. Anybody who is in the regulatory position that Tim Geithner was in, in my view the most important bank regulatory position in the world, how do you not follow up and say, wait a minute guys; what have you done? So it's unclear, and I hate to use this metaphor perhaps, but was this the sort of memo that was being sent at Penn State where you just kind of brush it aside or was it really an effort to do something?"
All that Bartiromo could say at that point was, "Oh my God."
Spitzer continued: "This bears an awful lot of inquiry. Because it goes to the very real question of whether the New York Fed did not fulfill its fundamental function to ensure the soundest security of the balance sheets of the banks all the way through the period leading up to the crisis. Is this one piece of evidence that runs contrary to that, or one piece of evidence that supports it? We don't know yet."
Still totally freaked out at the Penn State parallel, Bartiromo commented, "What a comparison." To which Spitzer replied, "Well let me tell you Maria, unfortunately when you see memos at the top being written like that, you never know, you have to ask the question, what preceded it, what came after it, otherwise you don't understand the texture of what was being done by that senior person."
Much of the media have tried, for the past 24 hours, to cover for Geithner, by portraying him as someone who blew the whistle on the Liborgate scandal, ignoring the fact that nothing was done by the New York Fed or the Bank of England at that time to halt the biggest financial crime in history. Sources close to the Geithner probe have stated that the case against Geithner is conclusive: He covered up the Libor rate fixing and he should have resigned on Friday once the New York Fed documents were released to the Congress.