Rick Santelli on Monday tore into the mainstream media for ignoring the London Inter-Bank Offer Rate (LIBOR) scandal and chided them for wasting time on petty and useless headlines.
Wait, what’s the LIBOR scandal?
“LIBOR … is the average interest rate the world’s largest banks pay when they borrow money. And this figure … is used to price hundreds of trillions of dollars worth of financial instruments, from high-yield corporate debt to student loans,” Christopher Matthews writes for TIME Business.
Simply put, LIBOR isn’t just some “financial services sector thing” — it affects the everyday interest rates associated with loans, credit cards, etc.
This is where things start to go downhill.
Barclays, one of the world’s largest banks, admitted two weeks ago that it had submitted false data in order to keep its borrowing rates low. And while that alone is enough to cause concern, the real problem lies in the fact that Barclay’s wasn’t the only bank pulling this kind of stunt.
“We’ve only seen the tip of the iceberg, yet the LIBOR rate rigging scandal has rocked the financial world,” writes Sam Dwyer for BostInno, adding that other banks are involved in the growing scandal.
It gets worse: the New York Fed, headed by none other than Secretary of the Treasury Timothy Geithner, knew as far back as 2007 about the rate rigging. 2007? You know that this means, right? It means that at least a few key players involved in TARP [Troubled Asset Relief Program] knew big banks were understating their borrowing costs!
And this is why Santelli is angry.
“You know, in the spring of 2008, there were a lot of e-mails that have now become at least, for the most part (a lot of it is blanked out), open for public consumption,” Santelli said.
“[I]nformation … was coming out as late as this Friday 13th regarding e-mails from the Federal Reserve, some from Tim Geithner [and] some from the Bank of England, with the notion, of course, that central bankers had a pretty darn good idea there were issues regarding LIBOR,” he added.
Yes, according to even the Associated Press, way too many people knew about this.
“Let’s think about this all from a different vantage point. Let’s think about this as taxpayers. Let’s think about the government and lack of due diligence,” Santelli continued.
“So, when we had that vote in October for TARP, where Congress was basically giving a green light to a program that was ill-fated, ill-designed,” he added, “How much due diligence did they do for our role as taxpayers in basically bailing out the banking system? Obviously zero.”
“Here you have regulators like the Federal Reserve Bank of New York highly aware there were issues. Did they put stipulations in that from this point forward this behavior has to be modified as part of the conditions for those checks?” he asked. “No, they didn’t.”
Watch Santelli explain the LIBOR problem [via CNBC]:
Seriously, just think about that. The Bank of England and the New York Fed knew about these problems and U.S. politicians still rushed forward with TARP.
“Where is the press with the outrage?” Santelli shouted.
“I love my Sunday shows. What did I learn? Things like jet skis are un-American. Oh, yeah that’s what I learned. Things like outsourcing un-American. Like hell it’s un-American!”
“What’s un-American is we now have Federal Reserve bank of New York and Treasury taking the heightened importance in regulating us in the future through Dodd/Frank. Shame on their legislation. They were aware of this, did nothing!” he added.