Fed Aware of Libor Problems in Fall 2007

By Simon Johnson

WASHINGTON (Reuters) - The New York Federal Reserve said on Monday that it sent Congress a second trove of documents that show that the central bank took action to fix problems with the key interest rate Libor. Up to 6,000 documents were delivered to the House Financial Services Committee, which has been investigating how the Fed responded when it first learned that Libor was being manipulated. The London Interbank Offered Rate, which underpins trillions of dollars in contracts and loans, is set by big global banks and is overseen by a private U.K. ...

On November 27, Bloomberg reported Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

Numerous people have asked me to comment on the LIBOR rate-rigging scandal. I have not done so previously because I had little to add. Zerohedge has done a fine job breaking every story. So have others.  I prefer to comment when I have an edge of some kind: a different angle, a different source, or if I can offer a more comprehensive analysis than other writers. As pertains to LIBOR, I still have no earth-shattering reports or breaking news. Rather, I am commenting because of repeated questions as to where I stand on the story.

  Germany has the second largest Gold reserves in the world behind the US. Since the early ‘80s, it has stored the majority of these reserves with the NY Fed (45% vs. 13% in London, 11% in Paris and the remaining 31% in Frankfurt).   With that in mind, everyone needs to be aware that last Monday Germany’s Bundesbank announced it will be moving a major portion of its reserves from the US and all of its reserves from France back to Frankfurt.  

  Germany has the second largest Gold reserves in the world behind the US. Since the early ‘80s, it has stored the majority of these reserves with the NY Fed (45% vs. 13% in London, 11% in Paris and the remaining 31% in Frankfurt).   With that in mind, everyone needs to be aware that last Monday Germany’s Bundesbank announced it will be moving a major portion of its reserves from the US and all of its reserves from France back to Frankfurt.  

LONDON (Reuters) - Britain's top financial watchdog, in a much-awaited reform of benchmark interest rates that have been plagu

By Simon Johnson Experienced Wall Street executives and traders concede, in private, that Bank of America is not well run and that Citigroup has long been a recipe for disaster.  But they always insist that attempts to re-regulate Wall Street are misguided because risk-management has become more sophisticated – everyone, in this view, has become more like Jamie Dimon, head of JP Morgan Chase, with his legendary attention to detail and concern about quantifying the downside.