Congress has eased demands that the Federal Reserve Bank of New York turn over thousands of documents that detail interest rate manipulation at big banks, whittling down the request and granting the regulator additional time.
The reprieve will afford the New York Fed another month to comply with the inquiry, according to people briefed on the matter. The agency had been under a Sept. 1 deadline.
The original document request came in July, when the oversight panel of the House Financial Services Committee sought volumes of records about the London interbank offered rate, or Libor, a benchmark interest rate that affects the cost of trillions of dollars in mortgages and other loans.
In a letter at the time, the oversight panel asked the New York Fed to detail its correspondence with employees from the banks that help set the benchmark, which is at the center of a multiyear rate-rigging scheme. The oversight panel, led by US Representative Randy Neugebauer, Republican of Texas, also ordered the New York Fed to turn over its internal Libor-related documents and any communication with other government authorities.
The subcommittee is also narrowing the scope of its request. Lawmakers are planning to seek communication among government authorities and documents circulated internally at the New York Fed, the people briefed on the matter said.
By steering clear of e-mails from bankers, the inquiry could avoid complicating a wide-ranging criminal investigation. Still, once the documents are received, Congress may ramp up its request, one person said.
The New York Fed already produced reams of transcripts this summer involving phone calls its officials had with Barclays. Barclays was the first bank to settle accusations that it tried to manipulate Libor for its own benefit. It reached a $450 million settlement with the Justice Department as well as regulators in the United States and Britain.
Regulators and criminal authorities around the world are investigating more than a dozen other big banks, including HSBC and Deutsche Bank, for their role in manipulating Libor, a measure of how much banks charge each other for loans. Banks are suspected of reporting false rates during the financial crisis to bolster profits and to shore up their image.
The scandal has consumed the banking industry and called into question the New York Fed’s oversight powers. In the case of Barclays, the New York Fed learned in 2008 that the British bank was submitting false rates.
But rather than pushing for a civil or criminal crackdown, the New York Fed advocated policy changes to the rate-setting process. The British group that oversees the rate adopted some of the changes. With the crisis in full swing, the New York Fed moved on to more pressing concerns.
That approach has drawn scrutiny from the oversight panel.