Timothy F. Geithner has apparently been accused of leaking information to at least one major U.S. bank, according to the meeting transcripts from the 2007 Federal Reserve meeting that were released last week. Of course the accusation wasn’t the focus of those transcripts because all eyes were on the fact that the Fed underestimated the financial crisis.
However Ryan Chittum from the Columbia Journalism Review and Zero Hedge both had plenty to say about the accusations against Geithner. Zero Hedge appears to have been the first publication to notice the accusation raised against Geithner.
It was in an exchange between Geithner and Jeffrey Lacker, who was the Richmond Fed President. Geithner apparently said that the banks were unaware that the Federal Reserve was “contemplating a change in policy.” He was talking about the possibility that the Fed would cut one of its most important interest rates.
Lacker asked him to repeat what he had said and then went on to say that he had spoken with Bank of America Corp (NYSE:BAC) President and CEO Ken Lewis, who told him that he “appreciated what Geithner was arranging by way of changes in the discount facility.” So it seems as if Lewis at least had some knowledge, allegedly from Tim Geithner, that a key interest rate was about to be cut.
Fed chairman Ben Bernanke simply thanked Lacker and asked Geithner to go on. Geithner said he was trying to “help them understand.”
Reuters asked Lacker if he would stand by the accusation he made against Geithner in 2007, and he released a statement to the media company saying, “From conversations I had prior to the video conference call on Aug. 16, 2007, I was aware of discussions among a few large banks about borrowing from their discount windows to support the asset backed commercial paper market. My understanding was that President Geithner had discussed a reduction in the discount rate with these banks in connection with these initiatives.”
Thus far the Treasury has declined to comment or to make Timothy F. Geithner available for comment on the accusation.