Senators Want Law Enforcement, Regulators to Step Up Investigation of LIBOR Manipulation a key group of lawmakers is asking for a thorough, independent investigation into the London Inter-Bank Offered Rate (LIBOR) manipulation scandal and for any wrongdoing to be fully prosecuted.
BigNews.Biz - Jul 16,2012 - Senators Want Law Enforcement, Regulators to Step Up Investigation of LIBOR Manipulation
WASHINGTON, DC – In an effort to prevent possible banking fraud and restore integrity to our financial system, a key group of lawmakers is asking for a thorough, independent investigation into the London Inter-Bank Offered Rate (LIBOR) manipulation scandal and for any wrongdoing to be fully prosecuted.
In a letter to U.S. Attorney General Eric Holder and the members of the Financial Stability Oversight Council (FSOC), which includes: U.S. Treasury Secretary Timothy Geithner; Federal Reserve Chairman Ben Bernanke; and the heads of the Federal Deposit Insurance Corporation (FDIC); Securities and Exchange Commission (SEC); Commodity Futures Trading Commission (CFTC); Consumer Financial Protection Bureau (CFPB); Federal Housing Finance Agency (FHFA); National Credit Union Administration (NCUA); and the Office of the Comptroller of the Currency (OCC), the Senators wrote that they are troubled by the allegations of potentially widespread fraud and urged a thorough investigation of “the banks and the process involved in setting LIBOR for any wrongdoing. Banks and their employees found to have broken the law should face appropriate criminal prosecution and civil action.”
In addition to investigating the banks, U.S. Senators Jack Reed (D-RI), Carl Levin (D-MI), Dianne Feinstein (D-CA), Tom Harkin (D-IA), Patrick Leahy (D-VT), Robert Menendez (D-NJ), Sherrod Brown (D-OH), Jeff Merkley (D-OR), Sheldon Whitehouse (D-RI), Frank Lautenberg (D-NJ), Daniel Akaka (D-HI), and Jeanne Shaheen (D-NH) are asking the U.S. Department of Justice to examine “allegations that U.S. and foreign bank regulators may have been aware of this wrongdoing for years. Just like the banks and executives they oversee, regulators who were involved should be held to account for any failures to stop wrongdoing that they knew, or should have known about.”
The LIBOR rate -- a measure of the cost of borrowing between banks and a crucial benchmark for various interest rates worldwide -- is used to set interest rates for credit cards, student loans, and mortgages in the United States. It has been termed the world's most important benchmark for interest rates, underpinning approximately $800 trillion in loans, derivatives, and other financial instruments.
Text of the letter follows and a copy is attached:
July 12, 2012
Dear Attorney General Holder, Secretary Geithner, and Members of the Financial Stability Oversight Council:
We are troubled that several of the world’s largest financial institutions, including several based in the United States, may be involved in an effort to purposely misstate the London Inter-Bank Offered Rate (LIBOR), a key interest rate used in as much as $800 trillion worth of financial instruments. LIBOR is used as a basis for interest rates from mortgages to complex derivatives that impact millions of American families and businesses. It is also used by regulators and the markets to help evaluate the financial strength of our banks.
At its most basic level, manipulating LIBOR by submitting inaccurate numbers might help these financial institutions:
• improve the value of their own trading positions that are linked to LIBOR;
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