Friday, 13 July 2012

New York Fed Says It Knew Barclays Underreported Libor

The Federal Reserve Bank of New York said it became aware that Barclays Plc was underreporting borrowing costs for the London interbank offered rate in April 2008.

A Barclays employee explained to a New York Fed staff member that “Barclays was underreporting its rate to avoid the stigma associated with being an outlier with respect to its LIBOR submissions, relative to other participating banks,” the New York Fed said in a statement posted today on its website.
“The Barclays employee also stated that in his opinion other participating banks were also under-reporting their LIBOR submissions.”
The district bank released the documents on its website after Representative Randy Neugebauer, a Texas Republican who serves on the House Financial Services Committee, sent a letter this week to New York Fed President William C. Dudley asking for transcripts of communications between the regulator and Barclays relating to setting interbank offered rates from August 2007 to November 2009.
Members of Congress are seeking information from U.S. regulators about the issue, while lawmakers in the U.K. are scheduled to hold hearings next week as they continue their own review. The rate-rigging scandal led to Barclays being fined a record 290 million pounds ($451 million) and cost Chief Executive Officer Robert Diamond his job.

‘Serious Concern’

“Any manipulation of this rate is of serious concern,” Neugebauer said in an e-mailed statement today. “We’ll continue looking into this matter to determine who was involved in this practice and whether it could have been prevented by regulators.”
Libor is calculated from a daily survey carried out for the British Bankers’ Association in London, in which the world’s biggest lenders are asked the rate they’re charged to borrow over a variety of short-term maturities in currencies including dollars, euros and yen. Banks are accused of low-balling submissions for the benchmark during the financial crisis.
To contact the reporter on this story: Caroline Salas Gage in New York
To contact the editor responsible for this story: Chris Wellisz at