The Federal Reserve Bank of New York contacted Bank of England Governor, Sir Mervyn King, in 2008 to make recommendations about Libor rates and increasing its accuracy, according to an e-mail dated 1 June 2008.
It was sent to Sir Mervyn and his deputy Paul Tucker by the then president of the Federal Reserve Timothy Geithner, who is now the US treasury secretary.
Mr Geithner called for six changes he believed would improve the integrity of Libor.
The Treasury Select Committee is meeting on Tuesday 17th July at 10.00am:
- Sir Mervyn King, Governor, Bank of England
- Paul Tucker, Deputy Governor, Bank of England
- Donald Kohn, Member, Interim Financial Policy Committee
- Lord Turner, Member, Interim Financial Policy Committee
- Paul Fisher, Executive Director, Markets, Bank of England
I’m pleased that the New York Fed responded to my request in a timely and transparent fashion. We’re reviewing the documents now, and once we’ve thoroughly examined them, we’ll decide how to proceed.
As much as $800 trillion in financial products are pegged to LIBOR, so any manipulation of this rate is of serious concern. We’ll continue looking into this matter to determine who was involved in this practice and whether it could have been prevented by regulators.
Commenting on the proposals for the creation of a Parliamentary Commission on Banking Standards laid before the House of Commons, the head chair of the commission Andrew Tyrie said:
The proposal laid before the House of Commons today to create a Parliamentary Commission on Banking Standards has the support of the leaders of all three major parties. This is vital.
The recent scandals demonstrate the need for higher standards in banking.
The perpetrators of wrongdoing should be held fully accountable for their actions.
It is the fact that so many appear to have got off scot-free that really sticks in the gullet of the electorate.
The actions of a few have impugned the reputations of many.
Hundreds of thousands of people in financial services work hard, honestly and for the benefit of their customers. They deserve better too.
The Federal Reserve Bank of New York has released documents that outline efforts in 2008 to highlight problems with Barclays and Libor and press for reform.
They reveal that senior officials at were aware in April of that year of Libor under-reporting at banks.
The Labour MP John Mann has been responding angrily to being left out of the Parliamentary Commission on Banking Standards. despite being on the Treasury Select Committee.
He has tweeted:
testosterone fuelled banking culture must be tackled to get positive change. Why no women on the Inquiry? Stand aside for Leadsom or Pierce
Tyrie's not put any women on his inquiry. Despite my availabilty I would have happily stood aside for Andrea Leadsom and Teresa Pierce
Bank Probe a 'Total Joke' http://t.co/TM5Gse7j
The Wall Street Journal have reported that Timothy Geithner, former president of the Federal Reserve Bank in New York sent a private memo to Bank of England Governor Mervyn King in 2008, calling for six changes that he said would improve the integrity of the Libor rate.
The latest disclosure makes clear that Federal officials were aware of irregularities in the Libor interest-rate market. The Geithner recommendations, which came in a June 1, 2008, memo, included a call to "eliminate incentive to misreport" by banks.
More documents are due to be released later today by the Federal Reserve Bank of New York, in response to demands by lawmakers for more information about Mr. Geithner's and the New York Fed's efforts to address questions about Libor.
ITV News' Political Correspondent Lucy Manning has been hearing that the Bishop of Durham has been selected to be a member of the Banking Inquiry committee. The Rt Rev Justin Welby is a former oil industry finance director and finance writer.
Downing Street stressed today that the three main government parties had agreed who would be on the committee for a parliamentary inquiry into the banking industry. The Prime Minister's spokesman said:
The membership of the committee is something for the political parties and they have agreed between themselves who can serve.
It is an unusual committee in that it can draw on advice and that includes using counsel to question witnesses.
The terms for setting up the Inquiry makes clear it will report by the 18th December so it will be a quick Inquiry. It will also be able to question witnesses on oath and appoint a barrister to examine witnesses.
There is obviously some concern that probing MPs have been left off (John Mann is now calling it a whitewash and says he'll set up his own inquiry.)
John Mann, Andrea Leadsom and Teresa Pearce did have a good session last week yet miss out on a spot on the Inquiry. So there is an issue it could lack bite. But the appointment of a Robert Jay style QC could sharpen things up. Will Mr Jay be free from Leveson by then?