Make us your home page
Instagram

Republicans criticize Geithner for not telling Congress about Libor manipulation in '08

WASHINGTON — Republican lawmakers are criticizing Treasury Secretary Timothy Geithner for failing to alert Congress four years ago that banks could have been manipulating a key global interest rate.

Geithner defended his actions at a hearing Wednesday before the House Financial Services Committee.

Geithner, who was then president of the Federal Reserve Bank of New York, said he immediately alerted U.S. and British regulators in 2008 when he learned of problems with the London interbank offered rate, or Libor. He also said the problems were written about in the financial media.

"I felt that we did the important and fully appropriate thing," Geithner testified.

But Rep. Scott Garrett, R-N.J., asked why Geithner didn't tell Congress.

"You have appeared before this committee countless times since 2008," Garrett said. "Why did you never mention it to the committee?"

Britain's Barclays bank admitted last month that it had submitted false information to keep the rate low. The bank was fined $453 million in settlements with U.S. and British regulators, and its chief executive resigned.

Documents show the New York Fed learned in 2007 that Barclays was manipulating the rate.

Other major banks, including Citigroup and JPMorgan Chase, are under investigation for similar violations.

A British banking trade group sets the Libor every morning after international banks submit estimates of what it costs them to borrow money. The rate affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.

Republicans weren't the only members questioning Geithner on the Libor scandal. Rep. Brad Miller, D-N.C., wanted to know whether Geithner had informed the Justice Department about the problems.

Geithner said he did not.

Some GOP lawmakers also asked Geithner why, as president of the New York Fed, he used a rate he knew in 2008 to be flawed as the basis for billions of dollars in bailout loans to big financial companies in the crisis.

Rep. Barney Frank of Massachusetts, the panel's top Democrat, defended Geithner's actions. He noted that Geithner informed the top U.S. regulators in 2008 during the administration of President George W. Bush.

Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson were responsible for most of the decisions on the bailout, Frank said.

"You were important, but not one of the top administration officials," Frank told Geithner.

EU proposes rate rigging as crime

The European Union proposed Wednesday to make manipulating key global interest rates a criminal offense. European Commission Vice President Viviane Reding said public confidence in the financial sector had nose-dived after the latest revelations about manipulations by banks of key lending rates, such as the London interbank offered rate, or Libor. Reding said EU action "was needed to put an end to criminal activity in the banking sector and criminal law can serve as a strong deterrent." The EU did not propose what specific sanctions rate-rigging would take, saying that would be up to member states.

Republicans criticize Geithner for not telling Congress about Libor manipulation in '08 07/25/12 [Last modified: Wednesday, July 25, 2012 11:34pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Last orca calf born in captivity at a SeaWorld park dies

    Tourism

    ORLANDO — The last killer whale born in captivity under SeaWorld's former orca-breeding program died Monday at the company's San Antonio, Texas, park, SeaWorld said.

    Thet orca Takara helps guide her newborn, Kyara, to the water's surface at SeaWorld San Antonio in San Antonio, Texas, in April. Kyara was the final killer whale born under SeaWorld's former orca-breeding program. The Orlando-based company says 3-month-old Kyara died Monday. [Chris Gotshall/SeaWorld Parks & Entertainment via AP]
  2. Miami woman, 74, admits to voter fraud. Does jail await, or will she go free?

    State Roundup

    MIAMI — An 74-year-old woman pleaded guilty Monday to filling out other people's mail-in ballots while working at Miami-Dade's elections department.

    Gladys Coego
  3. Bigger ships carry Georgia ports to record cargo volumes

    Economic Development

    SAVANNAH, Ga. — Bigger ships arriving through an expanded Panama Canal pushed cargo volumes at Georgia's seaports to record levels in fiscal 2017, the Georgia Ports Authority announced Monday.

    The Port of Savannah moved a record 3.85 million container units in fiscal 2017, the state said, benefiting from the larger ships that can now pass through an expanded Panama Canal.
  4. Dragon ride in Harry Potter section of Universal closing for new themed ride

    Florida

    Universal Orlando announced Monday that it will close Dragon Challenge for a new "highly themed" Harry Potter ride to open in 2019 — sending wizard fans into a guessing game with hopes for a Floo Powder Network or the maze from the Triwizard Tournament.

    Universal Orlando announced Monday that it will close Dragon Challenge on Sept. 5 for a new "highly themed" Harry Potter ride to open in 2019. The ride, originally the Dueling Dragons roller coaster, was renamed and incorporated into the Wizarding World of Harry Potter when the hugely popular area opened in 2010.
  5. Would you let your company implant a chip in you?

    Working Life

    Would you ask an employee to get a chip implanted in her hand? Sounds invasive and intrusive. But come Aug. 1, one company in Wisconsin will be giving it a try.

    Three Square Market - a developer of software used in vending machines - is offering all of its employees the option to get a microchip implanted between the thumb and forefinger. [Photo from video]