The ongoing Barclays Bank interest rate-rigging
scandal could have emerged much earlier: the US Federal Reserve
suspected in late 2007 that the numbers did not add up, documents
released Friday confirm.
The New York branch of the Fed said it alerted the US central bank
after it became aware of the inaccuracies through observation of the
markets. An employee of Barclays Bank confirmed the suspicions months
later.
On Friday the New York Fed office released a number of documents,
including phone call notes and emails from 2007-08, in response to a
request by a Congressional committee chairman.
The documents are of particular interest because the current US
Treasury Secretary, Timothy Geithner, was the head of the New York
Fed at the time.
After problems with the London Interbank Offered Rate, known as
the Libor, became public in mid-2008, Geithner offered suggestions
for improvements to the governor of the Bank of England, Mervyn King.
The Libor, a benchmark set for millions of daily financial
transactions, is calculated daily in London based on the reports of
18 banks. It is the average rate for interbank lending, and a crucial
reference for many loans in the greater economy.
Barclays was fined $451.6 million (290 million pounds) by
British and US regulators earlier this month over attempts to rig the
Libor.
The scandal is in danger of spreading, as several other financial
institutions are now under investigation.
