What’s Fed to Do as 15 of 18 Banks Fixing Libor Aren’t American
Mark Calabria at the Cato Institute usually isn’t shy about criticizing Timothy F. Geithner. Yet he says it was ultimately up to the British to deal with the manipulation of Libor, as only three of the 18 banks that set the London interbank offered rate are based in the U.S.
Geithner was president of the Federal Reserve Bank of New York in 2008 when he learned about banks under-reporting Libor, the global benchmark for $500 trillion of securities. He sent a memo in June of that year to Bank of England Governor Mervyn King raising concerns and recommending changes in how the rate is calculated. Little has been done to address the issue since, and King said last month that he only just learned of wrongdoing and Geithner didn’t highlight malpractice.
“Geithner is not the primary person in the world responsible for Libor,” said Calabria, Cato’s director of financial-regulation studies in Washington and a former Senate Banking Committee aide. “There were items on that memo that were absolutely first and last the responsibility of the British Bankers’ Association and by extension the Bank of England.”