As president of the New York Federal Reserve before and during the financial crisis, Treasury Secretary Timothy Geithner met repeatedly with Barclays officials, according to documents released by the bank and the New York Fed.
Though the subject of those discussions is unknown, they came at a time when Barclays was also talking to New York Fed officials about problems with an interest rate known as Libor, some five years before the bank agreed to pay $450 million to settle charges that it manipulated that interest rate.
The meetings raise questions about just how much Geithner, now the U.S. Treasury secretary, knew about the alleged manipulation of Libor, a critical interest rate that affects borrowing costs throughout the economy -- questions he'll have to answer at a Senate hearing later this month. They could also renew criticisms of Geithner as being too chummy with the banking sector he was charged with regulating in his role at the Fed.
According to The Huffington Post's review of Geithner's calendar during his time at the New York Fed, originally obtained by The New York Times, Geithner repeatedly spoke from April 2007 to October 2008 with senior executives at Barclays, including at an Oct. 10, 2008, morning meeting with Bob Diamond, the former Barclays CEO, who stepped down last week amid the ballooning Libor controversy.
Atimeline of events released by Barclays ahead of Diamond’s testimony before British Parliament last week also indicates that an Oct. 10, 2008, meeting took place between bank officials and unnamed Fed representatives. According to Barclays, the meeting that day was part of a series of discussions between the bank and the New York Fed during the financial crisis about the process of determining Libor.
Libor is set every day by a group of banks, including Barclays, JPMorgan Chase and Citigroup. It is based on the interest these banks say they have to pay to borrow money for short periods of time. Regulators are investigating charges that several banks, in addition to Barclays, misreported their borrowing costs to manipulate Libor higher or lower, depending on their needs, possibly affecting the borrowing costs for millions of individuals and businesses. During the crisis, the banks might have reported lower borrowing costs in order to avoid the appearance that they were suffering financial hardship.
The details of what was discussed during Geithner's October 2008 meeting with Diamond are not listed on Geithner’s calendar nor are the topics of his other discussions with Barclays officials. Some meetings likely concerned the bank's September 2008 takeover of Lehman Brothers at the height of the financial crisis. But the meetings raise further questions about how much Geithner and other U.S. financial regulators knew about alleged manipulation of Libor by Barclays and other banks years before Barclays admitted to wrongdoing in a $450 million settlement with British authorities and the Justice Department last month.
A Barclays spokesman, Chris Semple, said the bank could not confirm whether the Oct. 10 meeting noted on Barclays’ timeline was the same as the one listed on Geithner’s calendar. In its pre-testimony materials, Barclays wrote that the chronology “shows clearly that our people repeatedly raised with regulators concerns arising from ... Libor settings over an extended period.”
On its timeline, Barclays lists a total of 12 meetings with Federal Reserve officials from August 2007 to October 2008.
The degree to which federal regulators had advance warning about issues with Libor is a question that U.S. lawmakers are starting to ask, as well. On Tuesday, the Senate Banking Committee announced it will call Geithner and Federal Reserve Chairman Ben Bernanke to testify about the Libor scandal.
That announcement followed a letter sent Monday by Republican Rep. Randy Neugebauer of Texas, chair of the House Financial Services Committee's oversight and investigations panel, to New York Fed chair William Dudley, requesting transcripts of all communications between Barclays and the Fed concerning Libor from August 2007 to November 2009. “Some news reports indicate that although Barclays raised concerns multiple times with American and British authorities about discrepancies over how Libor was set, the bank was not told to stop the practice” of manipulating the rate, the letter said.
A spokesman for the Treasury Department did not immediately respond to a request for comment.
According to Geithner's calendar, five discussions with one or more Barclays executives were scheduled from April 2007 to October 2008. They include a breakfast on the morning of April 3, 2007, with Chet Feldberg, then chairman of Barclays America; an afternoon meeting on May 14, 2007, that included former Barclays CEO John Varley; and the Oct. 10 meeting with Diamond.
The calendar also indicates that Geithner also participated in conference calls with unnamed representatives of Barclays and a person identified as Paulson (possibly Treasury Secretary Hank Paulson) on the afternoon of Sept. 13, 2008, three days before Barclays announced its takeover of parts of Lehman Brothers at the height of the financial crisis.
Only one meeting on Geithner’s calendar during that 2007-2008 stretch is listed as focusing on Libor specifically -- a meeting titled “Fixing Libor” that was scheduled for the afternoon of April 28, 2008, between Geithner and eight other Fed officials, Brian Peters, Debby Perelmuter, Jamie McAndrews, Meg McConnell, Patricia Mosser, Sandy Krieger, Simon Potter and William Dudley.
No Barclays representatives were scheduled to attend that meeting.
In a statement dated Tuesday on its website, the New York Federal Reserve said, "In the context of our market monitoring following the onset of the financial crisis in late 2007, involving thousands of calls and emails with market participants over a period of many months, we received occasional anecdotal reports from Barclays of problems with Libor. In the spring of 2008, following the failure of Bear Stearns and shortly before the first media report on the subject, we made further inquiry of Barclays as to how Libor submissions were being conducted. We subsequently shared our analysis and suggestions for reform of Libor with the relevant authorities in the UK."