Geithner says he was quick to raise alarm when Libor worries arose
US Treasury Secretary Timothy Geithner, under pressure for not doing enough to stop fraudulent manipulation of a key benchmark interest rate, said yesterday he alerted the appropriate authorities "early on".
Mr Geithner said he became aware of the problem in 2008, when he was president of the New York Federal Reserve Bank, an influential regulator.
But documents released by the Fed show that, as early as August 2007, Barclays told Fed analysts about possible problems with low levels of Libor.
"In the spring of 2008 we took a very careful look at these concerns, and we thought those concerns were justified," Mr Geithner said.
"And we took the initiative to bring those concerns to the attention of the broader US regulatory community, including all the agencies that have responsibility for market manipulation and abuse."
Mr Geithner has repeatedly defended his actions, saying he told the UK authorities who oversee the British Bankers' Association that sets Libor.
"We felt that it was really going to be on them," he said. Citing newspaper reports of alleged rate-rigging by global banks, he added: "These concerns were in the public domain."
Mr Geithner, who is expected to step down if President Barack Obama wins re-election in November, came under fresh attack from members of the House of Representatives Financial Services Committee.
Congressman Jeb Hensarling seized on the fact that the Fed continued to use Libor as a benchmark for its emergency lending programmes, including the bailout of AIG.
"It appears the early response was to keep using it, which means it appears you treated it as almost a curiosity or something akin to jay-walking instead of highway robbery," said Mr Hensarling.
Mr Geithner replied: "I think that was the best choice at the time."
Barclays has admitted giving false information as part of setting the interest rate in a settlement with US and UK authorities. Dozens of big banks, including JPMorgan Chase & Co, are under investigation.
The Financial Services Committee has asked the Fed for all communications going back to August 2007 with the banks that helped set Libor. (Reuters)