Published October 15, 2012
WASHINGTON – The New York Federal Reserve said on Monday that it sent Congress a second trove of documents that show that the central bank took action to fix problems with the key interest rate Libor.
Up to 6,000 documents were delivered to the House Financial Services Committee, which has been investigating how the Fed responded when it first learned that Libor was being manipulated.
The London Interbank Offered Rate, which underpins trillions of dollars in contracts and loans, is set by big global banks and is overseen by a private U.K. banking group the British Bankers' Association.
The Fed was first pushed to send an initial trove of documents to Congress after Barclays admitted it had manipulated the rate for its own benefit and paid $453 million in fines to settle charges with U.S. and U.K. authorities.
Other big global banks that contributed to the setting of the Libor rates in 2008 are also being investigated.
Those documents, released publicly by the Fed in July, showed that banks were desperate to under-report their borrowing rates in order to appear stronger and that regulators were aware of the problems in how the rate was set.
The documents also showed that Treasury Secretary Timothy Geithner, who was the head of the NY Fed in 2008, raised alarms with U.K. authorities.
A spokesman for the NY Fed said the latest documents are consistent with information it has already provided and shows the Fed helped identify the problem of under-reporting of Libor, briefed relevant regulators and pressed for reforms.
The documents include internal New York Fed communications, communications between the NY Fed and U.S. regulators, as well as communications between the NY Fed and U.K. authorities, according to the Congressional committee.
A spokeswoman for the committee said that staff has now begun to review the documents.
It was not clear whether the Fed or the congressional committee would make the documents public.
(Reporting By Rachelle Younglai, Jonathan Spicer; editing by Carol Bishopric)