The Fix

Chapter 12 Crossing the Street

Crossing the street, in Washington parlance, is the act of taking a civil case to the Justice Department to launch a criminal investigation. From the CFTC's red-awninged headquarters on the outskirts of the city center to the DOJ's shabby Bond Building in the middle of town it's more like a 20-minute walk, past the glass-fronted citadels of the International Monetary Fund and the World Bank on Pennsylvania Avenue, through Lafayette Square and the tourists taking photos outside the White House lawn, to the corner of 14th Street and New York Avenue.

For the CFTC it was a pretty unusual journey to make. The two authorities had worked together—on Enron in 2002 and the natural gas price manipulation cases, for example—but the default position for regulators was to hold onto cases for dear life lest the Justice Department swoop in and take over, or worse, claim the credit. Libor was particularly sensitive because the CFTC had started pursuing it back in 2008, when no one else had the curiosity—or the sense of right and wrong—to investigate.

After hearing the Barclays tape, though, the CFTC knew it had to call in the feds. The DOJ has the power to indict individuals, set up a grand jury and, ultimately, close down businesses and send people to jail. If managers at the British bank were ordering the lowballing of Libor and traders were pushing the rate around for profit, that potentially constituted fraud, which warranted steeper punishments than a civil ...