One step ahead of the law.

Fed official alleges Geithner may have alerted banks to rate cut

By Alister Bull, Reuters

Sat Jan 19, 2013 1:28am EST

In the summer of 2007, as storm clouds gathered over the world’s financial system, then-New York Federal Reserve President Timothy Geithner allegedly informed the Bank of America and other banks about the possibility the U.S. central bank would lower one of its critical interest rates, according to a senior Fed official.

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According to transcripts of the call released by the Fed on Friday, Geithner at the time denied that banks knew the Fed was considering cutting the discount rate.

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Private disclosure of confidential, market-sensitive information by the central bank would be highly unusual, but it was not immediately clear if it would be illegal. It also was not clear if strict Fed internal rules governing confidential information would have been breached, or whether any internal or external investigation was mounted.

Not that I expect an orange jumpsuit, but clearly there should be (h/t Atrios).