The Senate Banking Committee's treatment of Treasury Secretary Geithner today, as with Federal Reserve Chairman Ben Bernanke last week, was much more polite than the House Financial Services Committee's questions Wednesday. And only one Senator brought up the Glass-Steagall bombshell by former Citibank chairman Sanford Weill on July 25.
Sen. Richard Shelby (R-Ala), after establishing that Geithner knew in May 2008, if not before, that the rigging of LIBOR involved three U.S.-based banks, asked, "Did you follow up after notifying the Working Group [of bank regulatory agencies] and the Bank of England; did you notify the Attorney General of the United States, the Justice Department?" Geithner responded about the way he did to most questions all day: "We are — the New York Fed, my colleagues back — my former colleagues are carefully looking through all the records of what the — who the — whom the New York Fed staff informed at that point." Shelby cut in, "Did YOU, sir, as president of the Bank, did you personally inform...?" Geithner: "No, I — I did..."
Sen. David Vitter (R-LA) later reprised many of the same questions and elicited the same non-answers from Geithner. Vitter and Shelby challenged Geithner for using the LIBOR rate he knew was rigged, to set the interest rates for the TARP and other bailout programs. But neither cited the clear statements by BoE Governor Mervyn King, CFTC Chairman Gary Gensler, and others that Geithner never raised any actual alarm about rigging of LIBOR with any of them (though he talked about his pet theories for "reforming" it). Nor did they demand to know why Geither never mentioned a word about LIBOR rigging in his many testimonies before Congressional committees since 2008.
Sen. Mark Warner, not a Glass-Steagall supporter in the past, raised it near the end of the hearing: "A very interesting comment by one of the, the architects of the collapse of Glass-Steagall, yesterday, to say, 'Let's put Glass-Steagall back, in case...' — you know, interesting — interesting transformation there." Warner said that banks' stock market equity was trading way below book value in their super-big state, and maybe the market was saying size may not be an asset; he might have been interpreted as asking Geithner to comment on the case for Glass-Steagall.
But Geithner lied in response, "You know, Congress thought about this question long and hard in considering financial reform." Not if he, Barack Obama, and Barney Frank had anything to do with it.