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john nichols is on the line with us is the washing for respondent for the
nation british in dot com and also the author of the brilliant new book
operon e-zine uh... whenever i eat whenever a
said it earlier booked and it reminds me of
mile francois me beyond a non does uh...
saying that
we need everybody in america to get wise you know it wiser figure out what's
going on we need an applies in
i like that storybook so after you had a couple agree yeah
solar you've been in the u_k_ and there's this banking scandal going on
you been looking into a what have you learned
well i would have learned it
that uh... we don't have much of the media when it comes to cover in the real
news in the world
articulate
they'll live or l ideal are banking scandal
that be a bigot
story great pretty that moving beyond the olympics another story
argues
is really um... but about heart
hale
of big ***
and just how badly they will lie to us
we've been repealed is
that the largest banks in the world
have a consortium setup where they get whose self report
the interest-rate that they pay
and that they feared appropriate for banking
at this now british bankers association as an act which is the trade association
through which they do this report
that that correct
and it'll be at the london interbank uh...
uh... possibility
and what they are thinking about it is that you know it very very little
regulation
the bank potentially get to cut the price of money
for the world
they get to decide how much they pay for money and how much they charge other
people for money
now why that's a big deal isn't the is our bank many of them not all of them
which have been bailed out by government
but it'll be hot much that they are out money that was went to 'em
with the idea that the bank
would it be responsible players that they would loan money
at reasonable rates
uh... and
that they would be engage in helping to
keep a economy vital and functional what we now find out
that the biggest banks in the world
lying
they were making up
their reports on
they were paying for interest what they thought the appropriate interest rate
was and they were doing so that was in a way that was dramatically to their only
advantage
into the punitive damage
out free market competition
a_t_m_ of any revitalization of the economy
that governor of the bank of england that sequently of the chairman of the
federal reserve board in the united state
that that what the bank
that he definition for the word
well phillipine and partisan factors has played has pled guilty to criminal
charges although and then paid a forbidden thirty five million as i
recall if order fifty million dollar fine
but uh... on you know
cheese nice work if you can get it i mean if you are i were to walk down to
the local bank in and say uh... gimme filer box
uh... i don't think we'd be able to pay a three rd on finding off
but nothing convicted
we made and i think you would look back at you
falsified
your
credit that she falsified your
economic that you made up yogi
figures right out of time
oscars launch would be liable for that you could be a lot of trouble
annabella back with
happened
internationally
and it becomes an american scandal as well
because we've learned that tim geithner our secretary of treasury when he was in
charge of the new york fat
uh... became aware of the potential for this fixing
interest rate
fault occasion of interest rate
notified the british authorities about
but then
we can tell
did nothing to follow up
well in fact the recommendations that he made to the bank of england about this
in some cases lifted word for word sentence for sent in the sense by sounds
from
recommendations that had been given to him
by banks
gap by u_s_ space peso if we give him the benefit of doubt
every say he was doing something it was beautiful
the fact that he became secretary treasury yet
their time of
incredible economic stability and great instinct about how the whole bank
account
and apparently people nothing to follow up on that
without that
three years
we've been lied to you
eisenhower interest rates about what banks are doing yet now i i have a i had
a theory i had my the lynne this week either reveals the limits of my
knowledge of how this works or
by insights into it
uh... the banks were
actually depressing interest rates or lying in a way that serve to depress
interest rates by saying that there are
interbank lending rates are at their bank land lending rates were lower than
they actually work because that was a sign of strength
so so you could argue that it was like a ally of vanity you know pay were better
on that you have to worry about this
but it seems to me that youth
the banks are reporting hello live
rate that's the rate at which
you know funds are against which funds are paid for landing and the but the
reality the banks know that the reality is that the risk premium is so much
higher than that to be really wouldn't be willing to what land at that
and yet that's the raid
at which commercial paper is being sold us the rate at which you know and i
uh... corporation or all of our mortgage holder
we have to borrow relative to since it's been artificially lowered
no bank is going to land at those rates doss you have a liquidity crisis bus all
you know the banks are saying you know on the one hand they say no we're just
fine relenting at these live really lower rates but then uh... somebody
comes them and says great i wanna start a factory or next and i think her please
let me my sick now we can't do that we won't lend money and that's exactly what
happened we had a year-and-a-half their where the banks locked up and refused to
land and i'm wondering if that if there's a straight line relationship
between that and the lies about live or
this simply no question that their use common practice is coming out with
british
uh... enquiring into this
but about the polio these banks were getting
intensity
advil they got the money for a very very low rate
they did not vote without
right they have that money in their account
on the line out because that they were they were said they were pending the
rates low yet if you know in a way that would be stupid alone and so it would be
out of the kind of tied their own hands
a couple got money the package and they don't want it to resolve but to this day
john you've got you've got banks that are borrowing from the fed up points or
one percent
and then they're buying treasury so that where the usr treasury department spain
and two percent interest
and then they've been then they pay back the fed up point no one person you know
i can he do this with a couple hundred billion dollars a couple trillion
dollars in you make
millions and millions of your money millions of dollars in profits
for doing absolutely nothing and where is all that money coming from
all that is coming out of tax dollars at the u_s_ treasury
and that's what i don't think
they're creating a fault impression
that you could just briefly here
of their own stability right
now this is a big deal edits where witnessing it all that come from going
down
they lied to their own adapters
you're already
billions of dollars worth of lawsuits being filed by adapters saying hold it
you created the impression electability that simply did not exist right it would
be the equivalent of general motors same
when they sold four hundred thousand cars in amman third-quarter
or whatever say national missile seven two thousand cars were doing just great
and so their stock goes up five points everybody buys in and but wait a minute
native americans that they lied about that our cars essel
it's a great big scandal edited
only beginning to get discussed in the u_s_
as thank you being asked a little bit about by congress
yeah we need to have a lot more attention but the banks the banks on
this town you know how they may have been really do there's so much power
uh... are they using the uh... adi spelling ally he'd be all are in the
british headlines yet
uh... they should be allied dash be or
yeah but they're at that
such a big scandal in britain
in such appropriate big-deal piano yeah that'd actually had the possibility of
destabilizing the government
edco reading it very very seriously i'd just wish
our media was treating it as seriously
the same bank
the state money well i think one of the differences is the average brit is
actually well-informed
and the average american has infotainment an intern t_v_ on
that bearish
itself was interesting have
of much more competitive the edited filegate failure and prime ministers
questions this is the most fun thing in the world
yes john nichols with the nation the nation dot com and author of the wrote
in your book uprising john thank you for being
bangkokpost is places for and and confirm that the other end of the
simplest will be that back fifteen minutes past the hour