(From THE WALL STREET JOURNAL)
By Sudeep Reddy
WASHINGTON -- U.S. lawmakers are launching probes into attempts to
manipulate key global interest rates, widening the focus beyond the
Bank of England to include regulators in the U.S. who knew about the
problem as early as 2007.
Senate Banking Committee Chairman Tim Johnson (D., S.D.) said Tuesday
his staff has started to schedule "bipartisan briefings with relevant
parties" to learn more about the Libor allegations. "It is important
that we understand how any manipulation may impact American consumers
and the U.S. financial system," he said in a statement.
For committee hearings this month featuring Treasury Secretary Timothy
Geithner and Federal Reserve Chairman Ben Bernanke, Mr. Johnson said,
"I am asking them to be prepared to answer senators' questions on this
matter." Mr. Bernanke is scheduled to appear in the Senate next
Tuesday to kick off his two-day semiannual testimony on monetary
policy. Mr. Geithner is scheduled to testify July 26 at a hearing
related to the Financial Stability Oversight Council.
In the House, the head of an oversight panel for the House Financial
Services Committee sent a letter Monday to New York Fed President
William Dudley seeking transcripts of communications between the New
York Fed and Barclays PLC, the bank at the center of the global
scandal, related to the setting of interbank rates such as the London
interbank offered rate between August 2007 and November 2009.
The House subcommittee chairman, Rep. Randy Neugebauer (R., Texas),
said the documents would be used "to get a preliminary understanding
of the nature of the discussions" between Barclays and the New York
Fed. He set a Friday deadline for the material.
The former Barclays chief, Robert Diamond, testified in the British
Parliament last week that Barclays "repeatedly" raised concerns with
U.S. regulators about the effect of the credit crisis on setting
Libor. He detailed 12 contacts between Barclays and the New York Fed
related to its Libor submissions.
In a statement, a New York Fed spokeswoman said the bank started
receiving reports about the problem after the financial crisis started
in 2007.
"In the context of our market monitoring following the onset of the
financial crisis in late 2007, involving thousands of calls and emails
with market participants over a period of many months, we received
occasional anecdotal reports from Barclays of problems with Libor,"
the statement said.
"In the Spring of 2008, following the failure of Bear Stearns and
shortly before the first media report on the subject, we made further
inquiry of Barclays as to how Libor submissions were being conducted.
We subsequently shared our analysis and suggestions for reform of
Libor with the relevant authorities in the U.K."
Mr. Geithner led the New York Fed at the time before becoming Treasury
secretary in January 2009.
British officials have suggested they missed years of warning signs
about Libor. Paul Tucker, deputy governor of the Bank of England,
testified Monday in Parliament that he was unaware of concerns about
Libor's reliability in 2008 although doubts about the rate's integrity
were widespread by the middle of that year. Barclays last month agreed
to pay about $453 million to settle a long-running probe by U.S. and
U.K. regulators into allegations that traders at the bank sought to
manipulate interbank lending rates.
(END) Dow Jones Newswires
July 10, 2012 20:21 ET (00:21 GMT)
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