Regulators acted forcefully and early on allegations banks were fixing the Libor interest rate, Treasury Secretary Timothy Geithner saidat the second annual CNBC and Institutional Investor's "Delivering Alpha" conference in New York on Tuesday.
Geithner was responding to allegationsthat the New York Federal Reserve may have known as early as August 2007 that setting the global benchmark London Interbank Offered Rate was flawed.
“We acted very early in response to concerns that the processes to set this rate were impaired and flawed and vulnerable to misrepresentation,” Geithner said.
“I took the initiative to brief the entire U.S. regulatory community on this at a very early stage,” he added. (Related: Libor Criminal Investigations Will Happen).
Geithner also said they brought it to the attention of the British and “took the exceptional step of writing them a detailed set of recommendations that revealed the extensive set of concerns.”
“We did the right and necessary thing and we did it early,” Geithner stated.
While Geithner said the initial reforms were modest and have not fixed the problems at the center of the rate-fixing scandal, “we have now taken the initiative involving all the countries in the world that have a stake in this to make sure we push for reforms that actually fix the underlying problem.”
Geithner added, “We’re going to make sure there’s a strong and credible response to follow.”