a might be a terrorist there. that's not what is happening. they're tracking american citizens who are totally innocent. it's totally unamerican. now "viewpoint" with eliot spitzer is next. [ ♪ theme music ♪ ] >> eliot: good evening i'm eliot spitzer and this is view point. treasury secretary timothy geithner was on capitol hill playing defense for his apparently too passive role responding to the libor scandal. geithner was president of the federal in 2007-08 when they were told expressly when the barclays bank and other big banks were manipulating libor. throughout the house financial services committee hearing geithner stuck to a script insisting he had behaved appropriately passing on both to

u.s. regulators and bank bank of england suggestion of the way libor was contemplated. but record remains clear that geithner did nothing to stop the manipulations. a bombshell dropped by sandy wild chairman and architect of bank concentration and deregulation who now wants all of that work reversed. >> i think what we should probably do is go and split up investment banking and banking have banks be deposit takers, have banks make commercial loans and real estate loans and have banks do something that is not going to risk the tax pair dollars. >> eliot: he must have had truth serum instead of cappuccino for breakfast. i came down and suffered through

the three-hour hearing because the issue seemed to important. we boiled down those three hours to less than three minutes. here are some extended excerpts from the republicans in particular didn't think secretary geithner was too big to fail. >> when did you alert the u.s. treasury and the justice department of the possibility that libor was being manipulated or rigged, and to whom did you state those concerns? >> i briefed the president's working group on machine markets. it included the fdc and the fed. >> how about the justice department. >> the justice is not a member of that committee. >> it appears that you treated it almost as a curiosity or something akin to jaywalking as opposed to highway robbery. >> we were concerned about this, we did the important very consequential thing of bringing it to the attention of full regulatory authorities that is

given authority for market and regulation abuse. >> what they did in roughly the time frame is to reach a far reaching investigation and ultimately took four years which resulted in the very strong appropriately strong response that you saw announced earlier this month. ultimately, that investigation brought in the sec and the justice. >> this all happened and the administration of president president bush and the working group was president bush's working group. >> did the new york fed or the federal reserve have enforcement authority in any way? >> um, the new york fed has a range of authority but the enforcement powers of the fed rests with the board of governors in washington not with individual reserve banks. >> from the libor situation, you can't have your cake and eat it too. what would happen if the regulators didn't catch this, didn't do anything about it

didn't tell congress, will they be fined? will any regulator from the top down lose their job secretary. >> congressman in my judgment the regulators did the necessary appropriate thing in this context, and they started that process very early. >> participants in libor admitted they were, in fact, misreporting. were you told that it was not just a theoretical vulnerability, but it was, in fact happening. >> we were not concerned that it was a theoretical vulnerability. >> i you asked chairman bernanke past week, is there any element of criminal flaw that is not admitted to in this transcript? >> there is a set of lawyers that will answer that question. >> eliot: as you just heard and saw, north carolina congressman brad miller is one of the good guys, a democrat that didn't give secretary geithner an easy

time. it's a pleasure to welcome him to "viewpoint." congressman, thank you for your cross-examination of him this afternoon, asking exactly the right questions and being right here this evening. you said it him and the answer was just heard, did you tell any of the right people that there was evidence of fraud going on in the market? did he do enough? >> i think he had well more than just notice that there was potential of gaming of the system. they in fact had one transcription between new york fed employees and the barclays trader who said yes, we are we we know we're not following an honest libor, and our stock prices went down so we started filing a false libor. >> eliot: and when the new york fed had, you know, somebody was a prosecutor for a lot of years that was a smoking gun or what

ever metaphor you want, they didn't do anything with that tent except a muted memo with here are some ideas to make the system better. >> they had a check list in front of them of all criminal fraud. statement, check materials check. >> eliot: you studied that in law school better than i did. >> you actuallyies were cuted cases. >> eliot: i had my notes in front of me. >> there were remarkable admissions in that transcript that was just more concerns generally whether libor had the potential that it was vulnerable, if it was an honor system, whether there were incentives to manipulate it, and when it needed to be changed. they knew, in fact, that it was being manipulated. >> eliot: this was an honor system based on self regulation. here some bank picked up the phone, called the regulator and said the system is busted and the regulateor shrugged it's

shoulders and then took four years for some other organization and regulator to do something about it. that doesn't speak well for the regulatory system. >> i don't think they ought to get jail terms. they're not guilty of criminal conduct, but the pattern of our regulators looking the other way has done great damage to our financial system, to our democracy, and the more they look the other way the more entitled the financial system, the financial industry seems to feel. >> eliot: the way they reacted in this context is a metaphor for what happened in the sequence of tsunami scandals we've seen for some reason the past months, the tsunami, and the regulators time and time again did what the new york fed did, which was shrug their shoulders. >> it seems that they've done that one after another. it does not appear that a moral compass was effecting behavior in any significant way. >> eliot: if you call it a lack

of backbone, laziness, you can diagnose it in many different ways. one thing that is constant and clear the regulators in this case perhaps glaring where they knew and as you said, the check list of elements of a crime were there and in front of them they still did nothing. i want to switch gears because of that remarkable statement from sandy wild. you're one of the lead sponsors. the safe banking system is designed to break up up the bank. >> the banks are too big and too complicated to manage. they're too big and complicated to regulate. they're too big and complicated for the market to discipline. nobody really knows what is going on with the bank, and they just assume that jpmorgan, for instance $2.3 trillion bank, they surely will be able to pay their debts. if they don't they still believe there is that implicit guarantee. we got to put an end to that. we got to put an end to the enormous economic political power that the biggest banks have.

they need to be smaller simpler. there were two ways to do it. one is to bring back glass-steagall, which will make the banks smaller or do which is to make them smaller and it will be necessarily less complicated. >> eliot: here's what was amazing what was said today. it's not that it intellect intellectually, but he said it. big is better, no, no, more capital. now you have the leading banker in the western world in the private sector saying that he shares your view and our view. what happened. >> he led the effort to deregulate and to allow banks to combine, to allow commercial banks and investment banks to combine again, to allow the banks get as big as they've gotten. >> eliot: will this lend political energy to your bill at this point? >> i think that it will. i think this is now going to

remain part of the debate, and every new scandal is going to give more force to the argument for it. i don't think the republican house of representatives is going to move this bill. it will will take a political change. there is more on the right as well. there is this weird combination of the occupy wall street left, and the tea party right all of whom-- >> eliot: you're not in either one of them. >> i'm in between. closer to occupy wall street. >> eliot: i don't see you holding the placards. >> and in between. sandy wild, the st. louis fed and the dallas fed as well. there are some very credible establishment figures who say the size and complexity of these banks is doing us no good. >> eliot: i want to thank you for your words your leadership on the safe banking act your voice needs to be heard more and

more. that's congressman miller from north carolina. i spoke with massachusetts congressman michael capuano. i started asking if the new york fed under geithner did enough, once it knew that the libor rates were being rigged. >> the people took four years to investigate it. i don't know whether that's an appropriate action yet. i know these investigations can take time. i do think if it had been known by the general public that an investigation was going on, that's one of my pet peeves with the department, so be it. >> eliot: tim geithner when president of the new york fed he was the regulator who oversaw all the banks one of the pieces of information he had was that libor rates were being fixed did he former a partnership with the banks or regulate them in a way that would have stopped some of these horrific events from

happening. >> the regulators, not just tim geithners, but the rig regulators have been regulating the banks for a long time. i think it's systemic. i don't think it's fair to look at one person. but it's across across the board and across administrations. >> eliot: you saw tim geithner put through tough cross-examination, do you think based on what you know that he did enough to pass on information that the libor market was being rigged. >> i don't know enough to answer that question honestly. i think it's a fair question, and i think it would be answered over time. it will probably be answered through the justice department revelation as it goes along. congress is not the appropriate body to do that level of investigation. but when it becomes available look i think geithner has done a decent job. i have my problems with some of the things he has done. i've made them public, but i'm

not ready to hang him yet on the basis of a news report. >> eliot: i don't think we want to hang him. >> you maybe but others do. >> eliot: others do. libor aside has tim geithner been a sufficient voice of reform of financial services or has he been too willing to accommodate the structure. >> i wouldn't single him out the administration, not just this administration, but even the clinton administration, they had part of the continuum of slowing deregulation and allowing the market to work with the oversight. i do think we've turned that corner and we're starting back for the right goal and would i like to see certain things? of course i would. that's my job to push but it doesn't mean that i'm ready to necessarily say that tim geithner has done his job. i think he has. i'll give him the grade of a b. i would like the grade of an a an

"a," and he's capable of doing it. >> eliot: how do you get all these entities-- >> you have to get the elected president to appoint the right people. you need people who know the industry. you can't just pick anyone otherwise you have no regulation and they run roughshod on them. there are good people. from what i know of tim geithner he's one of them, who straddles that a little bit. there is some fair argument that overregulation is bad. so you have to work with any industry i don't mean just the banks, but any industry that you regulate, you have to regulate a little bit. there is a balance of what exactly the right course at the time of what is happening. in '08 we had a financial crisis taking a lot of attention. >> eliot: here's what always struck me when i was in the regulateor/prosecutor world it struck me very certain principles could be articulated and had to be abided by. you don't lie, cheat, and fix markets.

>> that's the case here. >> we know because barclay has as acknowledged it. we know it has rated out to 12 other banks. individuals are on the cusp of being charged withville behavior. you can't fix libor without multiple banks being involved. why would it take four years to investigate a simple rigging-- >> it's probably not simple. i don't know that. i think you ask fair questions but i hesitate to jump to conclusions until the investigation is done. >> eliot: is that reasonable. >> i'm being reasonable it's a major investigation going on in a difficult and complicated situation. libor at the moment almost seems too simplistic. it seems a conglomeration of liars to rig it. i'm interested in criminal prosecutions, not just the fine, but you probably know better than better than i do with your past as a prosecutor, they seem

to have barclay's working with them at the moment. that's the way it always works. you get one bad actor to rat out the other bad actor. my open is if the allegations turn out to be true, and they feel true at the moment we'll see a fair number of individualses were cuted as well well. >> eliot: it's companies paying money. they don't care in the long run. barclays care about its reputation, but money doesn't matter. can we get prosecutors to bring charge to individuals and companies. >> i hope so. some of the things that happened in '08 you can article argue will it's criminal or not. but here it appears there was intention alma nipalation of the market. >> eliot: we went through god god dodd frank, sandy wild, the father of

the big bank theory said basically, i was wrong. take them apart. separate commercial and investment banking. does this redefine the playing field. >> it helps. i was one of the ones who repeal repealed glass glass siegal. i'm not against big banks i thought glass-steagall worked well for 60, 70 years. whatever it was. over two decades of slow deregulation, it didn't happen overnight. slow deregulation saying well, this one small step is okay. you end up with that reality and they woke up one day and just accepted reality. my argument at the time and today is when you have a speed limit of 65 mph and slowly but surely everybody ends up going 85 mph. the answer is not to raise the speed limit to 85. the answer is to reinforce the 65. >> eliot: it was death by a thousand cuts in terms of the

regulatory approach that left us with a system that was doomed with a failure and too big to fail. >> we still have congressmen advocating for that. >> eliot: your friends across the aisle, still want deregulation. i think they're nuts. thank you for your time on this. >> thanks. >> eliot: for more on secretary geithner's hearing. here with dennis kelleher, thank you for being here. you saw some of the hearing. you heard the two congressmen. you've seen sandy wild. is there a convergence that will break the logjam for reform. >> it might. at some point in time you reach a reflection point where people's mind dramatically change. what you've seen over the last several months, you've the jpmorgan, and the stories from jamie dimon who is the frontman for all the dirty business for

wall street. that went on for days, weeks and months. now we have the libor scandal that has just begun. and then hope we'll see individuals being marched off to court. now you have sandy wild. this abomination in the financial crisis was not brought to us by one party or one person. but he brought it together, using massive amounts of parties and campaign money and to take down regulation completely. >> eliot: a little historical footnote that i think should be understood. he went forward with his merger when it was technically illegal and said, don't worry we'll get congress to pass a law to change it and permit it, and they did. that shows how powerful these institutions were and are. >> they were and still are. >> eliot: now he says, enough, go back. >> now that he has cashed out and he has all his cash. >> eliot: and you're more

cynical than i am. i think you're wrong. >> no, i don't think so. the timing is a little questionable. you know, john reed, the former ahead of citicorp itself deserves more credit. john reed came out and testified at the united states senate and said he was wrong putting it together. he was sandy wild's partner. >> eliot: they were co-ceos until sandy forced him out. >> until what usually happens sandy showed him the door. john reed came out in 2009 and said it was wrong. it was the wrong thing to do, and we need to roll it back. he did it during a critical time during legislation. >> eliot: let's go back to the few seconds we have left, libor. focusing all this on the regulate e, with forget that the bad guys were the bankers. >> this is all phoney outrage. this is an excuse for partisanship to reign supreme. none of this outrage has been

demonstrated by one of those peoples about the crimes committed by the wall street banks or the wall street bankers. none of them have had wall street bangers saying look what you've done to the american people. look at your recklessness. none of that happened. >> eliot: i'm going to disagree with you a little bit. brad miller, the congressman just here. he has been a voice consistently going after the mal factors in the private sector and regulators. by and large i think you're absolutely correct. this has been an issue of political theatrics. stick around. another official, congressman barney frank. i'll speak to him next. this is "viewpoint." it is the defining issue of this era. the candidate with the most money does win. this is a national crisis.

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stream media. >>overwhelming majority of the county says: "tax the rich don't go to war."

>> eliot: congress and geithner locked horns today on libor. but will anything actually change. dennis kelleher from better markets will help us figure it out. you're watching "viewpoint."

>> eliot: joining me again is dennis kelleher to help us recap this eventful day in our nation's capitol. one of the people who live in a box mitt romney. when sandy wyle came out and said we got it wrong. and then he's saying the regulation is bad.

isn't there cognitive disdense that they'll have to look at where they are. >> this flood of news and information, you got libor going on. it will go on for a long time. the sandy wyle story is not going to go away. the counterattack on him has already begun. sandy is a big boy. he'll carry his message for a while, and it will resonate in this down. >> eliot: where are the counterattacks coming from. >> they're attacking his motives, he's doing it for other sets of purposes. and he's an ego maniac, and he likes to see his face in lights. there are lafayette reasons to criticize sandy wyle, but step back and listen to what he has to say. he was one of the key architects architects, there is only one industry in this country that threatens the financial system and the economy in the entire

country. it's 20, 25 banks. he was the one who put it together. he's now saying hey look at what happened. look at the wreckage in this country. it should not be threatening taxpayers and people ought to listen to him carefully. >> eliot: what is the motive they're attributing to him for him to turn his back on friends social context and say you're all wrong. >> that's a good point. one of the problems with these guys breaking out of the pack, they all go to the same clubs limos, their kids are all at the same private schools. it's a huge social act for someone at the top tier to come out like did he. i mean, there are a number of things, i don't want to repeat them but there are a number of things said about his motives. what financial reform is really all about. you're going to be protecting wall street profits or taxpayer pockets. that's the choice. sandy wyle made that case this morning. he referenced protecting tax payers. that's what we ought to be focused on.

how do we do that. >> eliot: you said a couple of things in that statement that is so critically important. even if his motives are not pure, he is right. now i think his motives are that he wants to set the historical record straight when he felt responsible for taking us down an alley that did not go so well. did tim geithner get off fairly today? should he expect worse tomorrow. >> you know, in the six months before presidential election there is no such thing as a fair hearing in washington, d.c. that's just the reality. >> eliot: can i stop you for a second number is there ever a fair hearing in washington, d.c.? >> well, someone with a senior senate staff i think there are a number of fair hearings for people who are trying to get things done. that doesn't ever make the news, because it's not exciting. they talk tim geithner because you want to pretend that you're not on the side of wall street when you really are. don't watch the wall street

lips. watch their wallets. they now how to invest. their lawyers and lobbyists have laid siege to this town and flooded campaigns with cash to buy friends to gut financial reform. tim geithner today stood up for financial reform, and he has before, and he's going to again between now and the election. sandy wyle stood up today for financial reform. he stood up on the side of taxpayers and he stood up for the right thing. if people live to that and pay attention, and if tim geithner does it more often, and if the president, as senator sanders said, gets into the game. in addition to talking in favor of the things that senator sanders talked about, social security, the candidate who stands up and says we're going to apply the same rules to all of america to wall street, we're not going to let wall street threaten taxpayers that's the candidate who will win. that's the right position, that's the right thing to do. >> eliot: what a bizarre world we live in.