Bank 'did not act on Libor advice'
Published 26/07/2012 | 09:22
US Treasury Secretary Timothy Geithner claimed the Bank of England could have prevented the Libor rate-rigging scandal if his recommendations had been taken on board four years ago.
Mr Geithner told US politicians he immediately alerted authorities in the US and UK, offering "detailed recommendations" to the Bank of England.
But he was criticised for not acting sooner and for failing to alert Congress in 2008 that banks could manipulate the Libor interbank lending rate.
Mr Geithner, who was then president of the Federal Reserve Bank of New York, said he "did the important and fully appropriate thing".
He said: "In the detailed recommendations we gave to the British, we identified a series of specific things that would make it untenable for this rate to be affected by the banks' incentive to lower their reported cost of funds. We gave them very specific detailed changes for doing that. If those had been adopted sooner, you would limit this risk going forward."
Mr Geithner added that the British Bankers' Association (BBA), which runs the Libor setting process, was not strong enough to oversee Libor.
Barclays was fined £290 million in settlements with US and UK regulators after attempting to manipulate Libor and its chief executive Bob Diamond was forced to resign.
Bank boss Sir Mervyn King has been questioned over whether he could have done more to prevent rate fixing after it emerged he had discussed problems with Libor as far back as 2008.
At a hearing of the House Financial Services Committee in America, Mr Geithner was also taken to task for failing to raise the importance of Libor rigging with politicians.
Documents show the New York Fed learned in 2007 that Barclays was manipulating the rate.