The New York Fed today is set to release documents in response to a request from Representative Randy Neugebauer, a Texas Republican who serves on the House Financial Services Committee. Neugebauer sent a letter this week to New York Fed President William C. Dudley asking for transcripts of communications between the regulator and Barclays relating to setting Libor rates from August 2007 to November 2009.
“In the context of our market monitoring following the onset of the financial crisis in late 2007, involving thousands of calls and e-mails with market participants over a period of many months, we received occasional anecdotal reports from Barclays of problems with Libor,” New York Fed spokeswoman Andrea Priest said this week in a statement.
Priest said that in early 2008, after the failure of Bear Stearns Cos. in the financial crisis, the district bank “made further inquiry of Barclays as to how Libor submissions were being conducted” and it later “shared our analysis and suggestions for reform of Libor with the relevant authorities in the U.K.”
The Senate Banking Committee plans to question Geithner and Fed Chairman Ben S. Bernanke on the scandal at regularly scheduled hearings this month. Committee Chairman Tim Johnson, a South Dakota Democrat, said July 10 he is “concerned by the growing allegations of potential widespread manipulation of Libor and similar interbank rates.”
Twelve Democratic senators, including Jack Reed of Rhode Island and Carl Levin of Michigan, yesterday sent a letter to Geithner and Attorney General Eric Holder asking for an examination of “allegations that U.S. and foreign bank regulators may have been aware of this wrongdoing for years.”
“This scandal calls into further question the integrity of many Wall Street banks and whether our prosecutors and regulators are up to the task of regulating them,” they said.
Among Geithner’s recommendations was to add a second Libor fixing for the U.S. market and to broaden the number of banks taking part in the U.S. beyond JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. That would “produce a fixing that is more representative of the London interbank market and less susceptible to the specific funding issues of institutions” that do not have a broad dollar funding base.
Libor is calculated from a daily survey carried out for the BBA in London, in which the world’s biggest lenders are asked the rate they’re charged to borrow over a variety of short-term maturities in currencies including dollars, euros and yen. Banks are accused of low-balling submissions for the benchmark during the financial crisis.
The Washington Post reported earlier on Geithner pressing British regulators to change the Libor calculation.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.