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Bernanke on the Hill

Chairman of the Fed Benjamin Bernanke testified before the House Financial Services Committee today. In his prepared remarks he hewed closely to his July 17th testimony before the Senate Banking Committee.
A surprising number of questions focused on the LIBOR scandal. One question in particular seemed to go to the heart of the matter. A Committee member read a transcript of a conversation between a Barclay's trader and a staff member at the Federal Reserve Bank of NY. The transcript seemed to show the trader acknowledging his complicity in the commission of fraud. The Congressman then read the definition of fraud to the Chairman. This matched what the transcript revealed.

The Committee member then asked the Chairman if he thought this combination was enough to justify a charge of fraud against Barclays. The Chairman was, predictably, reluctant to agree.

Fiscal cliffs, twists and sequesters are irrelevant in the face of this type of clearly defined unethical behavior. 

It is this type of refusal to acknowledge the plain truth that confirms we are still at risk of a significant decline in economic activity.
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