Rep. Barney Frank (D-Mass.) would like you to know that the Libor scandal isn't really Timothy Geithner's fault.
Frank, the co-author of the Dodd-Frank financial reform legislation, rushed to Geithner's defense on Wednesday during Geithner's testimony at a House Financial Services Committee hearing, blaming the less-than-agressive response of U.S. policymakers on Republicans.
"I do want to remind people that this all happened under the administration of President Bush," Frank said on Wednesday, according to National Journal. "The notion that this was all the problem of the president of Federal Reserve of N.Y. is frightening."
Frank noted that Geithner was "important but not one of the top administration officials," according to the Associated Press. He listed Federal Reserve Chairman Ben Bernanke and then Treasury Secretary Henry Paulson -- both Bush appointees -- as Geithner's superiors at the time, according to National Journal.
Sixteen banks are under investigation for allegedly rigging the Libor rate, a key interbank lending rate that acts as a benchmark for interest rates around the world -- including, incidentally, taxpayer loans to banks and AIG during the financial crisis. Banks may have been rigging the Libor rate for their own profit for decades, according to reports.
Geithner said on Wednesday that he found out that banks were rigging the Libor rate in early 2008 and notified regulators "early on," according to Reuters. "We took the initiative to bring those concerns to the attention of the broader U.S. regulatory community, including all the agencies that have responsibility for market manipulation and abuse," Geithner said.
But Geithner could have done more, Sheila Bair, former chair of the Federal Deposit Insurance Corporation, said on CNBC last week. "I don't understand why they didn't investigate," she said. "They did have authority to do that."
Frank may be understating Geithner's influence at the time. As president of the Federal Reserve Bank of New York, Geithner served as vice chairman of the Federal Reserve, the Fed's second-highest-ranking official. In addition, the New York Fed directly oversees the financial industry and is the most powerful district of the Federal Reserve.
Check out a timeline of the Libor scandal:
Barclays Begins Manipulating Libor Rate
Barclays allegedly began manipulating the Libor rate in 2005 and allegedly stopped manipulating Libor in 2009, <a href="http://www.businessweek.com/news/2012-07-11/barclays-u-dot-s-dot-say-libor-probe-doesn-t-affect-2010-case" target="_hplink">according to <em>Businessweek</em>.</a> But other reports indicate that <a href="http://www.huffingtonpost.com/2012/07/09/libor-scandal-manipulation-spanned-decades_n_1658696.html" target="_hplink">Libor fixing may have spanned decades.</a>
Barclays Employee Admits Libor Is Being Rigged
A Barclays employee told an analyst from the New York Fed's Markets Group that Barclays was indeed using false information to set the interest rate on April 11, 2008, according to <a href="http://www.huffingtonpost.com/2012/07/13/geithner-libor_n_1671211.html" target="_hplink">recently released Federal Reserve documents</a>. "We know that we're not posting, um, an honest LIBOR," the Barclays employee told the New York Fed's Fabiola Ravazzolo, according to a <a href="http://www.newyorkfed.org/newsevents/news/markets/2012/libor/April_11_2008_transcript.pdf" target="_hplink">transcript of the phone conversation.</a>
Geithner Privately Expresses Concern Over Libor's Integrity
In June 2008, then-president of the New York Federal Reserve Timothy Geithner sent a memo to British banking authorities expressing concern over the "integrity and transparency" of the key interest rate. Geithner did not inform British regulators that a Barclays employee admitted that Libor was being rigged, <a href="http://in.reuters.com/article/2012/07/25/geithner-libor-idINL4E8IP17720120725" target="_hplink">according to Reuters.</a>
Banks Ripped Off The Government During Bailout
During the 2008 Financial Crisis, the U.S. government lent money to cash strapped banks and AIG using Libor to determine interest, <a href="http://www.huffingtonpost.com/mark-gongloff/timothy-geithner-libor_b_1701904.html" target="_hplink">Treasury Secretary Tim Geithner told Congress on July 25, 2012.</a> The artificially low rate saved the banks and AIG billions, while costing tax payers the same amount.
Peter Mandelson: Barclays CEO The "Unacceptable Face Of Banking"
In April 2010, then-UK Business Secretary Peter Mandelson told the<em>Times of London</em> that then-CEO of Barclays, Robert Diamond, was "the unacceptable face of banking" after the bank announced that its CEO would receive a bonus of 63 million pounds, <a href="http://news.sky.com/story/771318/mandelson-attacks-bank-boss-for-63m-salary" target="_hplink">Sky News reports.</a> Mandelson also told <em>the Times</em> that banking bosses were expected to act with "a bit more modesty, a bit more humility" than Diamond's behavior.
Barclays Fined $450 Million
On June 27, Barclays disclosed to its shareholders that it would be fined $450 million by U.S. and U.K. regulators for conspiring to manipulate the Libor rate between 2005 and 2009, <a href="http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9374118/Barclays-libor-fixing-scandal-timeline.html" target="_hplink"><em>The Telegraph</em> reports</a>.
Barclays Chairman Resigns
On July 2, <a href="http://group.barclays.com/news/news-article/1329925915887/navigation-1330349038798" target="_hplink">Barclays announced</a> that it's Chairman, Marcus Agius, would be resigning in the wake of the Libor rigging scandal. In the official resignation letter, Mr. Agius stated that the Libor rigging constituted "unacceptable standards of behaviour within the bank." He went on to say: <blockquote>As Chairman, I am the ultimate guardian of the bank's reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside."</blockquote>
Robert Diamond Resigns As Barclays CEO
On July 3, Robert Diamond resigned as Barclays CEO, <a href="http://www.washingtonpost.com/business/barclays-boss-diamond-quits-with-immediate-effect-latest-scalp-of-price-fixing-scandal/2012/07/03/gJQAFeDxJW_story.html" target="_hplink"><em>The Washington Post</em> reports.</a>
Marcus Agius Re-Appointed As Barclays Chairman
On July 3, <a href="http://www.newsroom.barclays.com/Press-releases/Board-changes-907.aspx" target="_hplink">Barclays announced</a> that Marcus Agius would be reappointed as the bank's full-time Chairman following the resignation of Robert Diamond.
Did The Bank of England Encourage Barclays?
On July 3, Barclays released phone records between CEO Robert Diamond and the Deputy Governor of the Bank of England, Paul Tucker, that indicate that the BoE executive encouraged Barclays to manipulate the Libor rate, <a href="http://online.wsj.com/article/SB10001424052702304141204577506602345146644.html" target="_hplink"><em>The Wall Street Journal </em>reported.</a>
Diamond Goes Before Parliament
On July 4, Bob Diamond told a U.K. parliamentary panel that he believes other major banks were involved in Libor rigging, <a href="http://online.wsj.com/article/SB10001424052702304141204577506602345146644.html" target="_hplink"><em>The Wall Street Journal</em> reports.</a> He also stated that fear of being nationalized during the 2008 Financial Crisis contributed to its actions.
Bob Diamond Loses His $31 Million Bonus
Barclays CEO Bob Diamond agreed to forgo an extra $31 million bonus, the bank announced on July 10, according to the <a href="http://online.wsj.com/article/SB10001424052702303343404577518263465180508.html" target="_hplink">reports <em> Wall Street Journal</em>.</a> Diamond will still net his salary and pension for a year, which is worth about 2 million pounds.
At Least 16 Banks Under Investigation
At least 16 banks were reportedly under investigation for Libor rigging as of July 11, <a href="http://www.huffingtonpost.com/2012/07/11/libor-rate-scandal_n_1664737.html#slide=1212066" target="_hplink">according to Reuters.</a> In an internal bank memo circulated on July 13, Barclays executive committee told employees that, "As other banks settle with authorities, and their details become public, and various governments' inquiries shed more light, our situation will eventually be put in perspective," <a href="http://business.time.com/2012/07/16/libor-rigging-what-the-regulators-saw-but-didnt-shut-down/" target="_hplink"><em>TIME Magazine</em> reports.</a>
EU Weighs Criminalizing Rate Rigging
On July 25, <a href="http://www.huffingtonpost.com/2012/07/25/eu-criminalizing-rate-rigging_n_1701248.html?utm_hp_ref=business" target="_hplink">the European Union proposed making the rigging of international interest rates a criminal offense.</a>