Professor Luigi Zingales, author, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity, joins Thom Hartmann. The LIBOR rate-fixing scandal is coming to America. Now – more than a dozen banks are being investigated by the U.S. Justice Department to determine just how widespread the rate-rigging scandal, which might have cost consumers billions of dollars, really is. So far, only one bank – Barclays – has admitted guilt in the scandal. But several cities – led by Baltimore – are launching their own investigations to figure out if their pension funds took a hit as a result of the rate-rigging. During the financial crisis – the city of Baltimore was forced to lay off public employees and cut services. But the city now claims their fiscal problems were made worse by the manipulated LIBOR rates. Baltimore and other cities have filed dozens of lawsuits in a Manhattan Federal court against several banks including Bank of America, JP Morgan Chase, and Deutsche Bank – accusing the banks of manipulating LIBOR rates during the financial crisis to boost their own profits, while screwing over entire cities. So it could be a matter of time before some banksters’ heads roll. And by “heads roll” I mean a slap on the wrist fine – since we all know banksters are immune from jail time this day and age.
Congress is jumping into the mix, too, with plans to bring Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner to Capitol Hill for hearings before the Senate Banking Committee and the House Financial Services Committee. Given the charade on Capitol Hill when JP Morgan Chase CEO Jamie Dimon came down to testify a few weeks back, we shouldn’t expect too many tough questions about this latest financial scandal. Then again, if Treasury Secretary Tim Geithner knew what was going on while he was head of the Federal Reserve Bank in New York – then we might actually get some answers. After all, if there’s one thing Republicans love more than protecting Wall Street, it’s embarrassing the Obama Administration. But the bigger picture here is this. Four years after Wall Street crashed our economy – then made off with trillions of dollars in bailout money – leaving the middle class to suffer the effects of a Great Depression – here we are again – in the middle of another Wall Street scandal.
And just like the last scandal – it looks like there may have been collusion between the banks, regulators, and governments. As witnessed by the Tea Party phenomenon – at least before it was hijacked by billionaires – and more recently the Occupy Movement – faith in the American economic system is shattered today. So what effect might this latest scandal have – and what will it take to eventually restore faith in our economy – and get it back on the side of the American people?