NY Fed Kept Mouth Shut About Barclay's Libor Scheme

Barclays admitted that it was rigging Libor to the Federal Reserve Bank of New York back in 2008—and the New York Fed, and its then-head Timothy Geithner, told precisely no one. Geithner has said he sounded the alarm on Libor in 2008, and indeed, the Fed did suggest reforms then. But it neglected to mention that Barclays employees had essentially confessed to the scheme, the Washington Post reports. "So, we know that we're not posting um, an honest Libor," one said in a 2008 phone call.

It's unclear if Geithner himself was aware of those admissions, though documents indicate he held meetings on Libor with people who definitely were. "At no stage did he or anyone else at the New York Fed raise any concerns with the Bank that they had seen any wrongdoing," the Bank of England's governor testified last week. Some have also criticized the Fed for using Libor to determine how the AIG bailout and TALF would be paid back, even after it knew the rate was flawed. Geithner will testify before a House panel today. (More Barclays stories.)