Fed Knew of Libor Scandal Years Ago

The Federal Reserve Bank of New York knew something fishy was going on with the Libor rate as far back as August 2007, it has revealed. "We received occasional anecdotal reports from Barclays of problems with Libor," a spokesman said in a statement. The following spring, before any media reports on the matter had broken, it "made further inquiries of Barclays" about its Libor submissions, and even submitted ideas to reform the system to the British government, Reuters reports.

The Fed is likely to face criticism that it didn't do more. "Obviously they considered this to be within their orbit," says one Yale scholar. Barclays today released documents showing it contacted the Fed about Libor a dozen times. "This chronology shows clearly that our people repeatedly raised with regulators concerns," it said. Barclays remains under intense political pressure. In a bid to ease it, ex-CEO Robert Diamond today announced that he would voluntarily forfeit about $31 million in bonuses, the Wall Street Journal reports. (More Libor stories.)