Geithner says Libor inquiry will take time

Regulators are trying to determine if taxpayers were cheated, he testifies

WASHINGTON — Treasury Secretary Timothy Geithner says regulators waited four years to penalize Barclays bank for trying to manipulate a key global index because the investigation was complex.

Geithner told the Senate Banking Committee Thursday that he alerted US and British regulators in 2008 when he learned of problems with the London interbank offered rate, or Libor. He was then president of the Federal Reserve Bank of New York.

Britain’s Barclays bank admitted last month that it had submitted false information to keep the rate low. Barclays was fined $453 million in settlements with the Justice Department, the US Commodity Futures Trading Commission and British regulators. Other banks are being investigated.


Senator David Vitter, Republican of Louisiana, asked why, four years later, the government has not determined which big banks manipulated the Libor.

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Geithner said such investigations are complex and take a long time.

‘‘These things take a lot of time; you have to do them very carefully,’’ Geithner said of the investigations. He said the CFTC and the Justice Department ‘‘started very early.’’

A British banking trade group sets the Libor every morning after international banks submit estimates of what it costs them to borrow money. The rate affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.

Geithner said regulators are trying to determine if taxpayers were cheated in the 2008 bailouts of big financial firms. He said a rate that may have been artificially low was used to set interest on rescue loans to the firms.


US prosecutors, meanwhile, are preparing to file charges this fall against traders from several banks involved in a bid-rigging scheme to manipulate Libor rates, not just Barclays PLC, according to a person with knowledge of the investigation.

The charges against individuals, which would probably be filed by October according to the person, center on alleged rate-fixing activity that goes beyond the conduct described in last month’s settlement between Barclays and regulators in the United States and Britain.