Tim Geithner warns on Europe, fiscal cliff

The U.S. financial system has regained its footing since the crisis of a few years ago but is still threatened by instability in Europe and uncertainty about taxes and spending at home, Treasury Secretary Timothy Geithner will tell a House committee on Wednesday.
In offering his takeaway from the annual Financial Stability Oversight Council report, Geithner will highlight falling debt among financial companies and individual citizens, according to a copy POLITICO obtained of his prepared remarks for a House Financial Services Committee hearing. And he will challenge Congress to make policy choices sooner rather than later to give the financial sector a greater sense of stability.

But it is Geithner’s response to questions on Libor, the London interest rate benchmark, that will have Wall Street bankers and congressional overseers on the edge of their seats.

Rep. Randy Neugebauer, who sits on the panel, wrote a letter on Monday to Willam Dudley to ask what the New York Federal Reserve Bank did in 2008 about evidence that international banks were manipulating rates. Dudley is the New York Fed’s current president, and Geithner was its chief at the time.
“The role of government is to ensure that our markets are run with the highest standards of honesty, integrity, and transparency,” the Texas Republican wrote. “Therefore, any admission of market manipulation — regardless of the degree — should be swiftly and vigorously investigated.”

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