WAPO Investigation: Geithner Drawn Into Libor Scandal
While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way it calculated a critical global benchmark called the London interbank offered rate, or Libor, according to a June 1, 2008 e-mail obtained by The Washington Post.
Writing to the head of the Bank of England, among others, Geithner made six recommendations, which included eliminating incentives that could encourage banks to manipulate the rate and to establish a “credible reporting procedure.”
“We would welcome a chance to discuss these and would be grateful if you would give us some sense of what changes are possible,” Geithner wrote.
It’s unclear what other steps Geithner took and whether his efforts stopped any wrongdoing by banks. Last month, London-based Barclays, one of Europe’s largest banks, admitted it schemed to manipulate Libor during the financial crisis — and its chief executive has asserted that regulators knew about its activities but didn’t do much to stop them. The scandal has led to the resignation of Barclays’ senior executives.
With Libor scandal threatening to migrate from London to Washington, pressure is growing on Geithner and other regulators to explain what they knew and when.
On Thursday, several key Democratic senators called on the Justice Department to hold accountable bankers and regulators who failed to “stop wrongdoing that they knew, or should have known about.”
