Libor Scandal: New York Fed Silent On Barclays' Admission Of Rigging Benchmark Interest Rate

Treasury Secretary Timothy Geithner, who was then head of the Federal Reserve Bank of New York, did not communicate in key meetings with top regulators that British bank Barclays had admitted to Fed staffers that it was manipulating Libor, the Washington Post said, citing people familiar with the matter.

Documents released by the New York Federal Reserve Bank this month showed regulators in the United States and England had some knowledge that bankers were submitting misleading Libor bids during the 2008 financial crisis to make their financial institutions appear stronger than they were.

The reliability of the London interbank offered rate, which underpins transactions worth trillions of dollars, has been rattled by revelations that bankers manipulated it to profit on trades and hide their own borrowing costs during the crisis.

Among other details, the Fed documents included the transcript of an April 2008 telephone call between a Barclays trader in New York and Fed official Fabiola Ravazzolo, in which the unidentified trader said: "So, we know that we're not posting um, an honest Libor."

However, senior officials and investigators never heard an appeal from the New York Fed to investigate possible wrongdoing over Libor, the Washington Post said, citing two people with knowledge of the matter.

Geithner, through a spokesman, referred questions to the New York Fed, which declined to comment, the newspaper said.

The New York Fed and Treasury Department could not immediately be reached for comment by Reuters outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Jacqueline Wong)

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Source: http://www.huffingtonpost.com/2012/07/25/libor-scandal-new-york-fed-timothy-geithner_n_1700385.html

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