The "no one could have imagined" excuse is worn thin.
Raúl Ilargi Meijer of The Automatic Earth asks the hard questions about why banks have been allowed to pillage trillions of dollars from the world economy through the Libor rate-rigging scam.
Let's be bluntly honest here, why don't we: both Geithner and King are simply lying. And even if we can't prove they are lying, we can certainly state that their words lack all plausibility. That is because LIBOR is arguably the most important number in the financial industry of the past two decades, and people who reach positions such as the ones Geithner and King hold, MUST have known for a long time what was going on with LIBOR.Alas, I suspect BoE's Mervyn King to be a liar about the timing of his knowledge that Libor is not a credible benchmark.
Along the same lines that you don't win a Nobel prize in physics if you don't know that E=MC squared, you don't get the world's top jobs in overseeing banking and finance if you don't know what and who is involved in LIBOR. If only because it would make you a potential threat to those profiting from it.
The reason LIBOR was used as the foundation for TARP and other bailouts despite the fact that in the fall of 2008 everyone in the field knew it was rigged (well, except for Mervyn King) was not because there were no - potentially more reliable - alternatives that could have been used. No, it was the very fact that LIBOR was the rate that could most easily be manipulated. And was. Had been for years. The proof is there for all to see. Emails and letters are there to show this, no matter what denials are issued.
This email exchange from 2008 provides evidence. The British Bankers Association, the entity that reports Libor daily, rejected all but the first two of these recommendations.