New York Fed Faces New Scrutiny on Rate-Rigging Scandal
The Congressional scrutiny of the Federal Reserve intensified this week, as the regulator faced new questions about failing to prevent banks from manipulating interest rates.
In a letter to the New York Fed and the Federal Reserve Board in Washington, Senator Sherrod Brown challenged the regulators to defend their response to the rate-rigging scandal. Mr. Brown has questioned why the New York Fed, despite knowing that some banks were reporting false rates, pushed for broad reforms of the rate-setting process rather than penalizing the illegal behavior.
For their part, Fed officials have argued that they lacked the power to pursue the issue further. Mr. Brown, an outspoken critic of lax regulation, was unconvinced.
“It is difficult to accept the argument that the board has no authority to address this problem,” he wrote. Mr. Brown also outlined a series of questions for the regulators, asking them detail what attempts, if any, they made to thwart the wrongdoing.
An Ohio Democrat who sits on the Senate Banking Committee, Mr. Brown is the latest lawmaker to scrutinize the New York Fed’s role in the rate-setting conspiracy. But unlike most of the past lawmakers who have voiced concerns in recent weeks, Mr. Brown is a Democrat.