WASHINGTON -- Treasury Secretary Timothy Geithner says regulators waited four years to penalize Barclays bank for trying to manipulate a key global because the investigation was complex.
Geithner told the Senate Banking Committee Thursday that he alerted U.S. 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 U.S. Commodity Futures Trading Commission and British regulators. Other banks are being investigated.
Sen. David Vitter, R-La., asked why, four years later, the government hasn't determined which big banks manipulated the LIBOR.
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.
Although regulators knew at the time that the LIBOR was vulnerable to manipulation, they still used it as the basis for bailout loans. Geithner said it "was the best alternative available at the time."
The European Union proposed Wednesday to make manipulating the Libor and other key global interest rates a crime.