DOJ targeting multiple big banks, individuals for suspected criminal manipulation of LIBOR interest rate
Major financial institutions are being investigated by the U.S. Justice Department for possible manipulation of a key global interest rate known as Libor, during the 2008-2009 financial crisis.
Barclays, Citigroup Inc, J.P. Morgan Chase & Co., the Royal Bank of Scotland and Deutsche Bank AG are being scrutinized, according to media such as Market Watch. Libor, the London interbank offered rate, is based on rate submissions from a select panel of major banks. Barclays is one of those banks.
On Friday Federal Reserve Bank documents released showed an unidentified employee of Barclay’s told the New York Federal Reserve Bank in 2008 that the U.K. bank was filing false reports on Libor. Apparently the U.K. bank was misreporting the interest rate data to avoid “unwanted attention,” reports the Wall Street Journal. In October of 2008, after the financial crisis had worsened, the New York Fed was told that the Libor interest rate in question was “rubbish.”
The documents were released by the New York Fed in direct response to Libor inquiries from members of Congress about the role of current Treasury Secretary Timothy Geithner who was at that time head of the New York Fed.
Both Geithner and current Fed Chairman Ben Bernanke will most likely be asked about Libor by Senators in upcoming testimony. Some Democratic lawmakers also asked DOJ to examine whether any regulators failed to stop the “wrongdoing that they knew, or should have known about.”