The Fed's strategy in dealing with the Libor scandal is clear: Pass the buck early and often.

Federal Reserve Chairman Ben Bernanke followed that playbook to the letter in testimony Tuesday at the Senate Banking Committee, repeatedly telling lawmakers that the Fed had done all it could to respond to evidence that banks were manipulating a key interest rate. The primary responsibility for dealing with Libor, he said, rested with the British regulators and banks.

That approach didn't fly far, however, as lawmakers from both sides of the aisle set aside partisan differences to hammer Bernanke together over the Fed's inaction. They wondered why the Fed didn't warn the public of its concerns about the Libor rate, on which so many borrowing costs, including mortgages and business loans, are based.

Even today, Bernanke still doubts that Libor is a reliable borrowing measure: "I can't give that assurance with full confidence," Bernanke said in response to a senator's question.

Bernanke admitted that the Libor scandal is "undermining public confidence in banks and financial markets." But he also passed the blame For Libor's lingering problems to the British trade group in charge of Libor: "The British Bankers Association did not adopt most of the suggestions that were made by the Federal Reserve Bank of New York," he said.

The primary purpose of Bernanke's appearance was to deliver the Fed's semiannual monetary policy report to Congress.

In his remarks, Bernanke said that the economy appeared to have "decelerated" recently, with signs of slower hiring, consumer spending and economic growth. He said the Fed had cut its forecast for GDP growth this year to a range of between 1.9 percent and 2.4 percent, from a forecast in February of 2.4 percent to 2.9 percent.

The Fed also raised its forecast for the unemployment rate by the end of the year to between 8.2 percent and 8 percent, up from a range of between 8 percent and 7.8 percent. Fed policy makers think unemployment will still be between 7 percent and 7.7 percent at the end of 2014 -- a dismal prospect for the economy.

And yet Bernanke offered little hope that the Fed would take further action to help the economy, promising only that the Fed still had ammunition it could use, and that it stood ready to use it if unemployment did not fall.

Many of the hearing's questions, however, were about the Libor scandal. Senate Banking Committee Chairman Tim Johnson (D-S.D.) kicked the hearing's Q&A session off with a Libor question, in fact, asking Bernanke: "What did you know, when did you know it, and what did you do" about banks manipulating Libor.

Bernanke recited many of the events detailed by the New York Fed last week, when it released documents showing its response to the Libor scandal. He said the Fed warned regulators in the U.S. and U.K. about their concerns about Libor, including the memorandum written by then-New York Fed chief Timothy Geithner in May 2008 with six suggestions for making Libor more reliable (all proposed by banks, incidentally).

Bernanke said the New York Fed's actions triggered regulatory investigations into the scandal on both sides of the Atlantic, leading to the recent $450 million settlement by Barclays over Libor manipulation charges. Many more banks are still under investigation and will likely pay large settlements to regulators, too.

Bernanke's testimony was somewhat contradicted by testimony earlier on Tuesday by his counterpart at the Bank of England, Mervyn King, who said the New York Fed showed him no evidence of Libor manipulation. Then again, the Bank of England and other British regulators are involved in a furious game of buck-passing themselves.

Ultimately, Bernanke's message was that Libor is a British problem, to be solved by British regulators and banks. That answer did not satisfy Senators David Vitter (R-La.), Pat Toomey (R-Penn.) or Jeff Merkley (D-Ore.), each of whom pressed Bernanke on why the Fed did not do some things that were clearly in its power.

For example, why didn't the Fed come down hard on U.S. banks suspected of involvement in the Libor scandal -- namely, JPMorgan Chase, Bank of America and Citigroup -- and why didn't it warn the public about Libor's unreliability?

He did not directly address the first question, aside from pointing out that the U.S. banks are under investigation in the scandal. On the second question, Bernanke suggested that Libor manipulation was public knowledge, with outlets such as the Wall Street Journal and Financial Times doing the central bank's job for it -- "the press was full of stories about it."

Here are 16 banks involved in the Libor scandal:
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  • BARCLAYS

    The UK bank has been at the centre of a very public storm since U.S. and British authorities fined it more than $450 million last month for its part in manipulating Libor. The ensuing backlash cost chief executive Bob Diamond and chairman Marcus Agius their jobs. The pair have appeared before a parliamentary committee to testify about what went on at the bank, in a scandal which has drawn in British central bankers and government ministers.

  • BANK OF AMERICA

    Bank of America is among the banks being investigated, a person familiar with the matter told Reuters last year. The bank did not comment in its 2011 annual report. It is one of 11 banks accused of conspiring to manipulate Libor in two lawsuits filed by discount brokerage and money manager Charles Schwab.

  • BTMU

    The Swiss Competition Commission said in February that Bank of Tokyo-Mitsubishi UFJ was among those it was investigating on suspicion of conspiring to manipulate rates. The Japanese bank did not comment on any probes in its 2011 annual report. This month, the group suspended two London-based traders as a result of a probe into manipulating interbank lending rates, but the bank said that was not to do with their conduct at BTMU. They had previously worked at Dutch lender Rabobank.

  • CITI

    Citigroup said its subsidiaries had received requests for information and documents as part of investigations in various jurisdictions. The U.S. bank said it was cooperating. The bank is also subject to a number of private lawsuits filed in the U.S. against banks that served on the Libor panel. In December, Japan's financial regulator said it would penalise the Japan securities units of Citigroup and UBS after finding that an individual who worked at UBS and then moved to Citi had, along with his boss at Citi, attempted to influence the Tokyo interbank offered rate (Tibor).

  • CREDIT SUISSE

    Credit Suisse is one of 12 banks being investigated by the Swiss Competition Commission about alleged collusive behaviour among traders to influence the bid ask spread for derivatives tied to Libor and Tibor as well as the rates themselves. Credit Suisse said it was cooperating fully.

  • DEUTSCHE BANK

    The German bank said it was cooperating with investigations in the United States and Europe in connection with setting rates between 2005 and 2011. It has had civil actions filed against it in the United States related to the setting of Libor. Germany's market regulator has launched a probe into the bank over suspected manipulation of interbank lending rates, sources have said. Results are expected in mid-July. German magazine Der Spiegel reported, citing no sources, that two Deutsche Bank employees have been suspended after external auditors examined whether staff were involved in manipulating rates.

  • LLOYDS

    Lloyds said it was cooperating with investigations. It has also been named in private lawsuits in the U.S. related to the setting of Libor. It said it 2011 annual report that it could not predict the ultimate outcome of investigations or lawsuits. In May, the bank said two derivatives traders had been suspended following an investigation into possible interest rate manipulation.

  • HSBC

    HSBC has said it received demands from regulators for information in connection with Libor investigations and it was cooperating. It has also been named in lawsuits related to Libor in the United States. HSBC said in its 2011 annual report that it could not predict the outcome of the investigations and lawsuits.

  • HBOS

    The bank, now a subsidiary of Lloyds, said it was cooperating with investigations. It has also been named in private U.S. lawsuits related to the setting of Libor. HBOS said it in its 2011 annual report it was not possible to predict the scope, outcome or impact of the investigations and lawsuits.

  • JPMORGAN

    JPMorgan said it was cooperating with regulators and government bodies investigating the setting of Libor, Euribor and Tibor rates, mainly in 2007 and 2008. It has also been named as a defendant in private U.S. lawsuits over Libor.

  • RABOBANK

    Rabobank said it was cooperating with investigations into possible manipulation of Libor rates. It has also been named as a defendant in a number of civil lawsuits in the United States. Rabobank said it was confident the claims would be held unfounded and was conducting its defence as such.

  • RBC

    Canada's largest bank did not make any comment in its 2011 annual report on its involvement in regulatory probes into possible manipulation of interbank lending rates.

  • RBS

    Royal Bank of Scotland said it was cooperating with investigators, who had requested information. RBS said members of its group had been named as defendants in a number of lawsuits in the United States. The bank said it had substantial defences to these claims. Following a newspaper report last month that it faced a 150 million pound fine, RBS said there could not be any certainty as to the timing or amount of any fine or settlement.

  • UBS

    The Swiss bank said it had been granted leniency or immunity from potential violations by some authorities, including the U.S. Justice Department and Swiss Competition Commission, in return for its cooperation in the Libor manipulation probe. It did not specify what information it was providing. In December, Japan's financial regulator said it would penalise the Japan securities units of Citigroup and UBS after finding that an individual who worked at UBS and then moved to Citi had attempted to influence Tibor. It has also been the subject of U.S. lawsuits.

  • WEST LB

    The German bank was among those being investigated, a person familiar with the matter told Reuters in March last year. The bank made no mention of the probes in its 2011 annual report. In July last year it was dropped, at its request, from the panel of banks contributing to daily fixings of Libor for U.S. dollars.

  • NORINCHUCKIN

    The Japanese bank did not mention the investigations into possible Libor manipulation in its 2011 annual report. In April last year it was one of 12 banks sued by Vienna-based asset manager FTC Capital, accused of conspiring to manipulate Libor.