07/19/12 07/19/12 [captioning made possible by democracy now!] >> from pacifica, this is "democracy now!" the battle for damascus rages on the day after three members of president bashar al-assad's top brass were killed in a bomb blast. we will speak with reporter david enders. speak with davidk a lesch, author of "the new lion

of damascus: bashar al-asad and modern syria." and matt taibbi, author of, "the scam wall street learned from the mafia: how america's biggest banks took part in a nationwide bid-rigging conspiracy -- until they were caught on tape." and also we will speak about libor. >> their artificially repress in libor as to not pay out as much to any investor who has a libor- based instrument. 350 trillion dollars worth of investments are based on libor. they have been gaining the game, essentially. there's really nothing these guys have not been involved with. >> all of that and more coming up. this is "democracy now!," democracynow.org, the war and peace report. i'm amy goodman. intense clashes are reported across the syrian capital of damascus in one day after the bombing that killed three members of president bashar al- assad's inner circle, including his defense secretary and brother-in-law. damascus residents say some of the fighting is within sight of the presidential palace and government headquarters. more on syria after the headlines. at least five israeli citizens

were killed in bulgaria on wednesday when a bomb detonated on their bus. it was the latest in a number of attacks targeting israeli tourists in foreign countries over the years. speaking in israel, the israeli defense minister pointed the finger at iran. >> several hours ago, there is a terrorist attack on an israeli tourist bus. several people were killed and dozens were wounded. this is clearly a terrorist attack initiated by probably hezbollah, hamas, jiabao, or any other group the last jihad, or any other group either from iran or other muslim groups. >> iran has denied involvement in the attack calling israel's charges "ridiculous and sensational." and iceberg twice the size of manhattan has broken off from

one of greenland's two main glaciers. it was the second time in two years that parts of the peterman glacier have broken off after an ice island four times the size of manhattan crack apart in august of 2010. the worst u.s. drought in more than half a century has sent food prices skyrocketing as millions of acres of midwest crops indoors scorching temperatures. soybean prices reached a record high wednesday, and corn prices approach the record as many farmers were forced to plow what desiccated corn fields. more than 60 percent of the continental u.s. is in a state of drought with about 1300 counties across dozens of states officially declared natural disaster areas. meat and dairy prices are also expected to rise and the drought could continue to impact food prices into next year. on wednesday, the obama administration called on congress to restore expired disaster programs to help respond.

the agricultural secretary call the drought "the most serious situation and about a quarter century" and said he is pressing for rain. for our coverage of extreme weather and its ties to climate change, go to our special page on our website at democracynow.org. the banking giant capital one has agreed to pay a fine of $210 million for deceiving customers into paying extra charges on credit cards. under the scam, capitol one targeted the unemployed or people with poor credit and misled them to believe additional credit-card services were mandatory or free. most of the money will go toward compensating the bank's duped customers. the case marked the first enforcement action brought by the consumer financial protection bureau, established in the obama administration in response to the financial crisis. the families of three citizens killed in a u.s. drone strike in yemen last year have filed suit against the u.s. government.

the lawsuit accuses defense secretary leon panetta, cia director david petraeus, and to military commanders of unlawfully killing muslim cleric anwar awlaki and samir khan in a drone strike and then awlaki's teenage son two weeks later. filing the suit on behalf of the victims' families, the aclu and the center for constitutional rights say the assassinations were carried out with "vague legal standards, a closed executive process and evidence never presented to the court's." in a video released in conjunction with the lawsuit's filing, a grandfather called for the justice in his murder. >> a small boy being killed by an american drone away from his home, away from his family. his body was cut into pieces.

for me and my wife and my whole family, we were in a really very sad situation. we are still suffering today. i hope, as in the american, you look to what happened to my grandson. >> attorneys for the alleged army whistleblower bradley manning are seeking a military court's permission to cite evidence showing the leak for which he is accused cause no damage to the united states. on wednesday, his attorney said they should be allowed to present damage assessment reports that evaluated the impact of the publication of government diplomatic cables that manning is accused of providing to wikileaks. manning's attorneys recently won access to the documents after accusing prosecutors of withholding affirmation that could help manning's case. news reports have suggested internal government is

contradicting prosecutors' contention that manning harmed national security and aided u.s. enemies. a new report has found at least 110 african-americans have been killed by police, security guards, and self-appointed vigilantes since the start of 2012. the group malcolm x grassroots movement says african-americans were executed in a traditional killings at a rate of roughly one every 40 hours during the first six months of the year. nearly half the victims were unarmed, while others were alleged to have weapons that included a cane and a toy gun. racial profiling allegedly played a key role, with nearly 40% of police accounts citing suspicious behavior or appearance or traffic violations as the reason for attempting to detain the person they killed. new york, texas, and florida were among the states with the highest number of killings. in florida, where the unarmed teenager trayvon martin was shot to death by self-appointed neighborhood guard george

zimmerman, a dozen african- americans were killed. the report comes as george zimmerman appeared on fox this wednesday night for his first nationally televised interview. speaking to fox news host sean hannity, zimmerman says he has no regrets for killing trayvon martin >> is there anything you regret? do you regret getting out of the car to follow trayvon that night? >> no, sir. >> do you credit you had a gun that night? >> no, sir. >> do you feel you would not be here for this interview if you did not have that done? >> i feel it was all god's plan. and for me to second-guess it or just dit -- >> in retrospect, now the time has passed a little bit, is there anything you would have done differently? >> no, sir. >> george zimmerman also briefly addressed the new allegations made by female relative that he molested her for over a decade

and that he and his family harbored racist views. in his comments, zimmerman avoided the molestation allegations directly, but said he finds it "ironic" the sole witness to come forward to accuse them of racism is also someone who's accusing him of molestation. omar suleiman, the longtime former intelligence chief of ousted egyptian dictator hosni mubarak has died at the age of 76 while undergoing medical treatment in the united states. he headed egypt's intelligence services for more than 18 years and was a close u.s. ally, playing a key role in the bush a ministrations extraordinary rendition program. during the egyptian uprising last year, mubarak appointed suleiuman as his first-ever vice president and he later tried to run for president after mubarak's ouster. the british government panel has ruled a so-called u.s. vulture fund cannot collect more than $100 million judgment from the democratic republic of congo. peter grossman and claimed the

money after spending a fraction of the total to buy up an old debt. he is among a number of vulture investors who've demanded african nations pay over half a billion dollars for old debts for which the investors paid only a few million. but on wednesday, the british privy council granted the democratic republic of congo's appeal of grossman's award. the case was exposed by investigative reporter greg palast last year. you can go to democracynow.org to see his report. texas is carried out its first execution using a single lethal drug instead of three. 33-year old yokamon hearn was killed with a dose of the sedative, despite concerns from death penalty opponents that it takes prisoners longer to die with a single drug method. he was killed despite claims by his lawyers he had mental impairment due to fetal alcohol syndrome. he was pronounced dead 25 minutes after the injection began. at least four other states,

including ohio, arizona, idaho, and washington also use a single drug for executions. earlier this become a george opposed on the execution of another death row prisoner as it also prepares to execute prisoners using a single drug. a man who stripped naked at an airport in portland, oregon security checkpoint earlier this year to oppose airport screening measures has been found not guilty of indecent exposure. john brennan was arrested and charged in portland and as a parable in april -- airport in april after a pat down. his actions came amidst mounting secure the measures including concerns over the health impacts of full body scanners used in many airports. on wednesday, a circuit court judge ruled his actions were one of protests and in turn, protected speech. a federal judge has sided with efforts by muslims in tennessee to begin worshiping at an

islamic center and mosque in murfreesboro. it is 35 miles outside nashville. the islamic center of murfreesboro has come under repeated attacks including arson and vandalism and was denied a critical building permit in june. wednesday, judge campbell from national issued an order granting worshippers access to the mosque in time for ramadan, which begins thursday. democrats organizing the party's upcoming national convention in charlotte, north carolina have quietly stopped calling the host venue by its name, bank of america stadium. in fundraising appeals ahead of the september event, democrats have referred to the site as " panther stadium," the name it had been before bank of america purchased the sponsorship rights in 2004. the move appears to mark an effort by the democratic national committee to distance itself from symbols of the wall street bailout like bank of america after reneging on a pledge to stage the convention without corporate donors.

those are some of the headlines. this is "democracy now!," democracynow.org, the war and peace report. i'm amy goodman with juan gonzalez. >> welcome to all our listeners and viewers from around the country and around the world. we begin our show in syria were the 16-month uprising has entered uncharted territory after wednesday's bombing that killed three members of president bashar al-assad's inner circle, including his defense secretary and brother- in-law. fighting between government troops and opposition rebels has been reported across damascus, including locations within sight of the presidential palace. president al-assad has not been seen publicly since before the bombing, but it has been reported he is in the coastal city of ataxia. syrian rebels applauded wednesday's bombing. reuters obtained in an amateur video by a leader of the free syrian army. >> as in my greetings to the heroes of the free syrian army who were able to hit the fortress of this criminal and

target heads of this criminal regime. god willing, we will hit him. soon, we will be at the republican palace because these heroes who were able to reach the den of these criminals, god willing, will be able to reach this criminal, bashar. >> the government said wednesday's attack were sparked by outside forces and internal terrorists. this is syria's information minister, omran zoabi, speaking on state tv. bombing and all that happened in syria are acts of murder, seven tosh, bombings, and assassinations. their political, ethical, and the response of all these fall directly on the hands of the arab and western governments, but there intelligence agencies and their spies. and these people are responsible for what happened today.

all the countries to send even one bullet to syria are all responsible. not just a bunch of bullets, but even just one bullet. even those countries whose in $1 are responsible. all of these people are responsible, and it will all be punished. they will be punished. >> for more directly to damascus, syria, joined by a syrian activist to agree to speak on the program on the condition we do not disclose her name. she is joining us by "democracy now!" of history and listen carefully it may not be that easy to understand. can you explain what is happening right now on the streets of damascus and your response to the bombing yesterday that killed three of al-assad's top inner circle? >> thank you for having me. the city of damascus is very

anti today, very quiet when it comes to publish it is very quiet today, when it comes to people. you do not see a normal way of life. it is not normal. this morning, there were a lot of refugees. apparently, they have left the areas where there was shelling and bombing and in distributed in the streets, waiting for cars or buses to take them to a safe place. to be honest, it is a very [unintelligible] seen in damascus. there are several areas in damascus with shelling and

bombing, but it is not normal here. i cannot share information that i do not know exactly what is going on. but france confirmed that the shelling has not stop -- friends have confirmed the shumlin has not stopped. shelling has not stopped. the shelling has not stopped all night. we have just learned it is getting even more dangerous. i am not sure yet, but there are reports many have been injured. >> in terms of how the syrian media, television and newspapers, have been reporting what happened yesterday, can you give us an idea about that? >> to give the an idea of -- >> how the syrian media has been reporting the latest incidents,

the killing of the defense minister and other members of the president's inner circle in the bombing, how they have been portraying this action? >> i am sorry to disappoint you, it to be honest, i do not watch the media at all. since i woke up, for now, they're trying to send aid and finds a places for the people. i think is important for you to know, we're not watching the news media. it is getting apparent here -- [unintelligible] times sorry, but we don't care. >> what about it means the defense minister was killed,

that the brother-in-law of al- assad was killed, his deputy? the significance of these figures dying, the escalation of the attacks in damascus? >> i can only tell you what people are saying here. [unintelligible] people are saying -- some are saying that it just does not make sense. [unintelligible] there were rumors about them

being killed. yesterday, an explosion happened, a bomb happened. so it raises questions. why is the regime telling the truth that happened yesterday? i don't want to talk about there is a sense of conspiracy going on, but let's just say we do not trust the regime at all. the people died, then we raise questions. how can they say such things? it would hurt a lot of their supporters. it would just mean they are losing control. it would mean assad is leaving very soon. i don't know, i mean, a lot of people were glad about what happened yesterday, but it just [unintelligible]

we anticipate massacres, because yesterday's was huge. we don't know what is going happen next. >> how are you keeping yourself safe? why have you agreed to do this interview? >> honestly, [unintelligible] i am keeping myself safe by moving around from one place to another. i do not stay in one place for a long time but i do not use my phone alive. -- i do not use my phone a lot. i use the internet right now, for example. i tried to be careful talking on the phone and use the people wisely that i spend time with.

stuff like that. >> what would you like people in the united states and the outside world to know, the main message you want to get out to other people around the world, even as the united nations failed on a string of furred, a new discussion as to whether to extend the -- has failed, even now, new discussion as to whether to extend the monitoring effort? >> [unintelligible] i can sense that people here do not look for other state support, you know, country support. [unintelligible] we don't trust government.

this has been very clear over the last six months and protesters are taking to the streets, saying we do not even carry out your statements, kofi annan, we only care about the people, the people of the world. the egyptian people, braibahrain people. [unintelligible] they are just looking for army support. it has become clear for our five

months ago that we want to do this alone. we want to finish our job. that is the feeling on the street. >> so you do not want to see outside intervention? >> no. some of the areas were looking for intervention, but that is because [unintelligible] because [unintelligible] they see what powerful countries think and act, and the only care about themselves.

to be honest, i have to say this, people here think the united states and other powerful countries in the world will get into syria after assad falls. [unintelligible] we are not looking for intervention, just support. >> and howe organized is the street? are you with other people as she talked about moving from place to place, not wanting to use your cell phone, using proxies when using the internet, etc.? >> it is not very organized, to

be honest. it is not organized because there are problems, security problems, the basic problems. i don't know how to say this. the more you are scared you are to be detained, the more you do not know how to organize your thoughts but i don't know how to say it right. there is pressure on us on the streets. there is not a lot of room. we're trying our best. [unintelligible] there are beautiful heroes on the streets who know by just trusting -- they know they may be hit by a sniper, but they

know they cannot not help an injured person. >> you say york against intervention, looking for support. what do you mean by that? >> i am against intervention. look, there is no demonstration right now in damascus. there's no way to protest peacefully. the battle has become military. not just the army and regime, but with the [unintelligible] this may be something that a lot of people in the west do not understand. what i mean is, the people in syria are against intervention, but what they won this arms

support bill-what they want is arms support. we want weapons to protect ourselves. we're talking about a regime that is bombing and shelling neighborhoods. we need weapons to protect ourselves. there is no other way. in that sense, we don't want people coming to our country, we just want people to send us guns so we can protect our own country. >> thank you very much for being with us, for risking his interview. you have had a difficult history in syria. thank you very much. when we come back, we will go to our reporter who's just returned from syria, david enders, and we will be speaking with a professor who has written a book about bashar al-assad. stay with us. ♪ [music break] ♪ [music break]

>> this is "democracy now!," democracynow.org, the war and peace report. i'm amy goodman with juan gonzalez. we're to on a reporter david enders who is a special correspondent for mcclatchy, based in beirut, lebanon on. he has been to syria four times this year, most recently in june. what is your assessment of what is happening in syria, the significance of the attack yesterday, the killing of the inner circle and the situation on the ground as she listened to our guest from damascus right now on "democracy now!" party of string? >> i think what is happening is this is the trajectory of things for probably the last six months. we seen the rebellion grow in numbers, organizational capability. they have attempted to strike at al-assad and his inner circle many times. this is the first time they have been successful. we have seen the fighting

officially moved to damascus and the government for the first time shell neighborhoods inside the city proper is. it is done during fierce fighting in some of the suburbs last six months, but i think what we're seeing is the government crumbling under the weight of a massive rebellion. is simply cannot put it down. >> to want ask about this report the israeli intelligence chief told a closed session of the israeli parliament that they believe there is an increasing number of jihadists and al qaeda activists who have begun to move into syria, and from the israeli intelligence viewpoint, they fear radical islam in the upper hand within the syrian rebellion? >> that has been a concern from

outside syria since the beginning of the rebellion. as the borders become more porous, and the government becomes weaker, the potential that people with various agendas will infiltrate the country increases. what i have seen in my time amongst the rebels is there are people who code as conservative religious islamists, people who code as a jihadi. but people are fighting to bring down the government. if there are splits in the rebel ranks between people who see a more islamic-based government or religious-based government as opposed to a secular government, we will see that manifest itself after the government falls. and as syrians try to decide

what the government looks like after a side. i mean, i have seen very few foreign fighters. i've not met any personally. i talk to a bunch of people who said they are there or talk to leaders of groups who have confirmed they are present, but the uprising is made up of syrians who are fighting to topple their own government. >> david enders,, to click above the the report you did for a new show of dan rather. it discusses the ongoing conflict in syria between forces loyal to president bashar al- assad and opposition forces seeking to drive him from power. let's go to that clip. >> it's a hot night in early june. rebel fighters are preparing to rural outpost inut or posin a syria. they load homemade bombs into a

car that will bring them closer to enemy lines. a boy too young to fight watches as the rebels amassed arms for the fifth day of fighting. their goal? eject a group of syrian soldiers from an area of town. >> with this, >> the town is on the border of an area that today is largely controlled by the rebels. it is just after dawn the next morning. the streets were almost completely deserted.

all but a few civilians have fled the town. rebel fighters planted their bombs a few hours before and are now taking their positions. >> soon, a fire fight begins. the rebels intend to stand their ground. >> dan rather narrating david enders' report from the ground in syria. as you listen to our guest from damascus talking about no intervention but support for the people fighting against the regime, actual arms support,

your thoughts and who is doing this and how common is that call? >> well, i think most people in the opposition armed and unarmed gave up on the idea of international military intervention some months ago. what you're seeing in that footage with those guys planting bombs is essentially the contingency plan. it without the aid of the international community, syrians are largely doing it themselves. this has become a very widespread in many parts of the country, grassroots insurgency or rebellion, they call it a revolution. and so as i was listening to the woman from damascus, what concerns me most is the fact these neighborhoods where the fighting is taking place or places that are already overburdened, overcrowded with refugees from all over the

country. one thing that really struck me as i was in syria was that we're just not able to see the extent of the crisis that is occurring there with regards to internal displacements, especially. i noticed a number of people yesterday saying, where are people going to go now? i think that is a very important question. what is happening there is extremely serious and aid is not reaching many of these people. >> david enders, thank you for being with us. we turn now to our next guest, continuing our conversation on syria in the wake of wednesday's bomb blast that killed a top semi-officials in damascus, we go to san antonio, texas, where we're joined by david lesch, author of, "the new lion of damascus: bashar al-asad and modern syria." his forthcoming book is called

"syria: the fall of the house of assad." he is a professor of middle east history at trinity university in san antonio, texas. celis to bashar al-assad is >> i think his son who started out with good intent. they're people who would argue with that thinking he was the evil dictator from the beginning. i was able to meet with him frequently over a number of years and i think he is someone who in the beginning people had high hopes and critics petitions and probably too many high expectations, as it turned out. i found him personally to be unpretentious, even self- deprecating. over the years i saw him grow into the position of become much more comfortable with power. i don't mean that in a good way. what often happens is that with authoritarian leaders and authoritarian structures is that an alternate reality is constructed or orchestrated

around this person by his sick of fans, but those who praise him on a daily basis around him and being the only human, people start to believe there's something close to a profit sent to save the country. at the he started to believe the press, believe the propaganda -- i think he started to believe the press, believe the propaganda. since the uprising began, in his speeches when he says it is the result capricious forces outside working with unwitting accomplices on the inside try to unseat the regime, i think he believes it. it is a divorced from reality. >> what about the issue, at least syria has been seen for decades as a more moderate force within the middle east and the arab world, certainly more tolerant than let's say the saudi monarchy or this enormous rebellion, and a popular

uprising has arisen there were as saudia but arabia remains remarkably -- where saudi arabia remains remarkably calm. >> saudi arabia had about one at a $30 billion the monarchy injected into the economy shortly after the arab spring began, basically as a national drive to prevent an uprising from occurring. syria does not have the riches of saudi arabia and had no such luxury. it is an out there tyrian system. we see the so-called secular republics across the arab world are the ones that have been hit the hardest and the quickest. the syrian regime for a variety of reasons has been able to withstand the uprising longer than say mubarak in egypt or gaddafi in libya, primarily because the military security apparatus has remained loyal to the regime. and for a host of other reasons.

perhaps most of all, their willingness to make that decision there was a security solution from the very beginning and it would crack down and repressed brutally the uprising over time. >> david lesch, i want to ask about how president bashar al- assad has framed the uprising against him. this is a rare german interview from broadcaster ard earlier this month. assange said most of the people being killed in the country are sympathetic to his regime. >> you cannot know about the criminals without knowing about the victims. the majority of them are government supporters. how can you be the criminal and victim at the same time? the majority of people support the government in large part of the others are innocent people who have been killed by different groups. >> he went on to explain who you holds responsible for the who

massacre in may, where according to the land, 108 people were killed, including 34 women and 49 children. >> gains came in from hundreds outside the city and attack the city and attacked law- enforcement forces unit inside the city. then they killed many families and as you mentioned, women and children. many of those killed were government supporters, not oppositionists. >> that is president bashar al- assad. david lesch, explain his view and also when you changed your view of bashar al-assad. >> this is consistent with the narrative of the regime since the beginnings of the uprisings, his explanation he gave in that interview. one of the saddest things personally for me is he did have a genuine offer of support of the country early on. he mortgaged all of that when he

chose instead of implementing dramatic reform at the beginning of the uprising, he chose to crack down. so he lost his mandate to rule. he lost his legitimacy to rule. another personal level, i saw this change in particular in 2007 and his "re-election" that was a referendum where he was the only one running for another seven-year term, and i met with him in the election process. he had a kind of cathartic moment or he really started -- i could see he believe the propaganda. i remember thinking specifically to myself that he is president for life. he drank the kool-aid. power is an aphrodisiac and rather than changing the system that many of us had hoped from the very beginning, they're out there tyrian system had changed him. >> the killing of his inner circle yesterday and what this means as it comes closer and closer to the palace, can you

talk about how his father ruled and the killing particularly of the massacre of thousands in hama? do you think we could see anything like this happening all at once? i mean, thousands have already been killed. >> that is my big fear right now in the wake of the bombing yesterday. the regime is going to come out, as we saw in the interview or the statement by the minister of information in syria, he said they would punish whoever did this. all authoritarian regimes always want to be seen as strong an acting from a position of strength. my fear is the will act compulsively and lash out in a way that casts a wide net. certainly, there are those in -- loyalists to al-assad's brother who used to be the head of military intelligence in syria for many years. they could lash out without

regard to what the president wants to do or want to see. unfortunately, from the regime's point of view and from the opposition's point of view, is a calibration of bloodletting where the regime was to repress the rebellion but does not want to engage in any of massacres that might galvanize or compel the international community to act more assertively and it has already. however, in the wake of yesterday, my fear is that something could happen close to what happened in 1982 in hhma -- hama. >> david lesch, thank you for being with us, author of the biography of al-assad, "the new lion of damascus: bashar al-asad and modern syria." his forthcoming book is "syria: the fall of the house of assad." he is a professor of history at trinity university in san antonio, texas. this is "democracy now!," democracynow.org, the war and peace report. i'm amy goodman.

when we come back, we're looking at the financial crisis in this country and will talk particularly about libor. stay with us. stay with us.

>> this is "democracy now!," democracynow.org, the war and peace report. i'm amy goodman with juan gonzalez. >> we turn now to matt taibbi, a contributing editor for rolling stone magazine and his most recent in-depth piece is, "the scam wall street learned from the mafia: how america's biggest banks took part in a nationwide bid-rigging conspiracy -- until they were caught on tape." matt taibbi has been closely following the libor scandal. 16 international banks are accused of rigging a key global interest rate used in contracts worth trillions of dollars. the london interbank offered rate -- known as libor -- is the average interest rate at which banks can borrow from each other. some analysts say it defines the

cost of money. the benchmark rate sets the borrowing cost of everything from mortgages to student loans to credit card accounts. >> matt taibbi is with us in new york read his latest book is called, "griftopia: a story of bankers, politicians, and the most audacious power grab in american history." welcome to "democracy now!" explained libor. >> libor is basically the rate which banks borrow from each other. it is a benchmark that sets a lot of international investment products are pegged to. when libor is low, that means the banks felt confident in each other. when it is high, in means there's generally instability. what we have been doing in the scandal are two different types of manipulation. one in which the banks manipulated libor downward so as to create the appearance of good health generally. and more specifically, a much more insidious corruption where there were manipulating it both up and down in order to capitalize on particular trades depending on what the banks were holding that day.

so this is an explosive gigantic financial scandal. a >> matt taibbi, i was listening to lawrence kudlow and cnbc, the group of the business journalism did he claims this is a victimless crime, that this has been blown out of proportion by the rest of the media and by some of the government regulators. >> i cannot imagine how he would publish how sane person would describe this as a victimless crime but basically, every city and town, to say nothing of the rest of the world, has investments that are pegged to libor. most of them are holding investment -- accounts that will go down. >> i thing most people do not understand. if the interest rate is going down, that means you are paying less. but they do not understand the swaps going on within

governments. >> people are thinking of their own credit cards or mortgages. it is true, most did been fed. but they also manipulated it upwards at times. when it was downward, those individuals did benefit. on the whole, overall, ordinary people actually suffered. mainly because local governments, municipal governments tended to lose money. if you live in a town that had a budget crisis that had to lay off firemen or teachers or policeman, or could not provide services or textbooks in their schools, that might be due to this. remember, even the tiniest manipulation downward, when you're talking about a thing of this scale, would result in tens of trillions of dollars of losses. it is an enormous scandal. it eclipses' anything we have seen since 2008. >> on wednesday, timothy geithner defended himself against criticisms that regulators should of done more

to address concerns over the credibility of the libor interest rate. >> we acted very early in response to concerns that the process seize this at this rate was impaired and vulnerable to misrepresentation. we were worried about it, concerned about it. i took the initiative to brief the entire u.s. regulatory committee on this at a very early stage, in early may. my staff and briefed the sec and brought to the attention of the british and took the exceptional step of writing them, putting in writing a detailed set of recommendations that revealed the extent of the concerns in that context. and the u.s., to its credit, set in motion at that stage a very powerful enforcement response. the first results of which you have seen.

>> hours treasury secretary timothy geithner. your response? >> first of all, the bank of england says the memo he sent to the british actually did not outline any specific regulatory concerns and did not give him any information, but only proposed steps in the future. those steps were more recommendations for more self regulation for the banks. my question is, if the bank of england and the fed knew about this activity dating back to 2008, why was nothing done? why were there no criminal investigations until now? why did the rest of us not hear about this? this information to be pertinent to everyone who makes investments. it was kept secret. the information the fed got was some of the banks were not only manipulating libor, but doing it because they felt they had no choice because everybody else was doing it. for the fed to get that information and not immediately

launched a massive criminal investigation or help the justice department do that, speaks to the ineffectiveness of the response. >> is a part of the problem that some of these governments and central banks actually looked aside at was going on because they wanted to keep interest rates low and hopefully bring the economy's back and having some kind of economic resurgence? >> absolutely. you could say, the bank of england and the fed knew about this in 2008, but they had an interest, perhaps, in seeing libor artificially suppressed because in that panic of 2008 when everything in the markets was going haywire, it actually benefited governments by creating the image of financial soundness in the markets. but that is an irrational response because it is a terrible precedent to set for the government to allow manipulation of the markets in

any way, and second, the banks were not doing this just to make themselves look healthy. they were also doing this to make money. they were trading against this affirmation in what essentially was the biggest, of insider trading you could possibly imagine. the-biggest kind of insider trading you could possibly imagine. >> the wall street journal editorial page has portrayed barclays bankers as the victim when the scandal first broke, the journal ignored it for weeks and then in a piece called "barkley's bank-," erode -- talk about the u.s. media coverage of the libor scandal. >> first of all, there has not been enough coverage in the u.s., probably because u.the

scandal has not spread to our shores. but it will. we know of three banks already that have committed to the conduct. it eventually will involve big american banks as well. we don't have to mention them. the other banks in the survey will be involved in this as well. i think the american media in general has been slow to realize the gravity of the scandal because there's all the financial corruption the news editors are generally reluctant to go there, especially something as complicated as libor. but what we are going to see is a lot of coverage like what you just heard from "wall street journal" were there will be a suggestion that this was done and sort of a patriotic manner in order to create an appearance of soundness during a time of crisis, done on behalf of governments. i'll suggest that is going to be the first line of defense for these banks. >> i want to ask about

something else related to banks in your connection to the mafia. the recent revelations that hsbc, one of the biggest banks in europe in the did it was laundering tens of millions of dollars in drug money from the mexican drug cartels, forcing one of its chief officers to resign publicly in a hearing? >> that is a big scandal a probably has been overshadowed by the libor scandals recently. we have heard things like this before. banks are not asking enough questions about where the money is coming from. back in the late 1990's with the russian mob money that was flown through new york by the billion to a lesser degree, the scandal involving jon corzine and his company and what questions did chase asked or not ask when dealing with them. there is clearly and laxity among all the banks and asking

enough questions about where money is coming from. i suspect the hsbc scandal will help spread awareness in that regard as well. >> what is the solution, matt taibbi? >> to the libor situation? >> yes, and overall -- >> to the creek banks through >> into the administration, shoring up and supporting and protecting? >> the libor scandal creates the mother of all regulatory dilemmas because this scandal could not have happened if it was just one or two or even three banks acting as rogue participants. the way libor works, they take 16 banks every day, take the four has numbers and the four lowest numbers and throw them out. they average the remaining numbers. that is pretty much all the banks have to be in on it in order to move the needle in any one direction.

you're talking about 16 of the world's most powerful financial institutions. if there are cooperating and essentially what is a gigantic international price fixing operation, what do regulators do? fines clearly will not be sufficient even if they pursue criminal investigations and jail a few of the traders, that will not really be sufficient either. apprises a tremendous question. -- it raises a tremendous question. it could result in a massive shake-up of the entire financial system. >> we will have part 2 online at democracynow.org and talk about your latest piece, "the scam wall street learned from the mafia: how america's biggest banks took part in a nationwide bid-rigging conspiracy -- until they were caught on tape." and also find out only talk about bain, what private equity actually is. democracy now! is looking for feedback from people who appreciate the closed captioning. e-mail your comments to outreach@democracynow.org or mail them to democracy now! p.o. box 693 new york, new york 10013. [captioning made possible by

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