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U.S. lawmakers to probe Geithner on Libor problems
July 25, 2012 / 1:56 PM / 5 years ago

U.S. lawmakers to probe Geithner on Libor problems

<p>U.S. Treasury Secretary Timothy Geithner testifies regarding the annual report of the Financial Stability Oversight Council before the House Financial Services Committee on Capitol Hill in Washington, July 25, 2012. REUTERS/Jonathan Ernst</p>

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner on Wednesday will face tough questions from lawmakers on whether he acted swiftly to address problems with the setting of the benchmark interest rate Libor when he was the head of the New York Federal Reserve.

Geithner has already publicly defended his actions twice in interviews and has said he not only made recommendations to U.K. authorities on how to enhance the credibility of the Libor rate but that he also alerted U.S. regulators to potential wrongdoing.

Barclays Plc (BARC.L) has since admitted to giving false information as part of setting the interest rate in a settlement with U.S. and U.K. authorities and dozens of big banks such as JPMorgan Chase & Co (JPM.N) are under investigation.

The House Financial Services Committee has asked the New York Fed for all communications going back to August 2007 with the banks that helped set Libor, or the London interbank offered rate.

The first trove of documents from the New York Fed showed that Barclays had flagged concerns as early as 2007 and that Geithner sent the email to Bank of England Governor Mervyn King in June 2008 with the Libor recommendations.

In prepared testimony for the House panel hearing, Geithner does not mention Libor. The hearing had been scheduled to examine the work of the powerful new financial system supervisor also known as the Financial Stability Oversight Council.

This will be lawmakers first opportunity to question Geithner. Last week, Fed Chairman Ben Bernanke told lawmakers that the process for setting the rate was structurally flawed and said reforms were in the hands of the private U.K. banking group responsible for Libor.

Reporting by Rachelle Younglai; Editing by Andrea Ricci

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