Sir Mervyn King, governor of the Bank of England, has been put at the centre of the Libor-rigging scandal after a senior US official called on him to reform the interest rate market in 2008.
Timothy Geithner, who was then the president of the Federal Reserve Bank of New York, called for six changes he said would improve the integrity of Libor, the London interbank offered rate which is used around the world to set the rate of borrowing for many households and companies.
Geithner, who is now the US treasury secretary, sent his memo in June 2008. The memo, published by the Bank of England on Friday (pdf), shows that the recommendations made by Geithner came before October 2008 when Barclays was found to have lowered its Libor submissions to ensure there was no suggestion that it was in financial difficulty during the banking crisis.
The Bank appeared to pin the blame on the British Bankers' Association, which compiles Libor. The Bank said on Friday that a review of Libor was launched by the BBA in June 2008 in the light of "concerns about difficulties in setting Libor in the stressed market conditions of late 2007 and 2008". The governor endorsed Geithner's recommendations. » | Jill Treanor, City Editor | Friday, July 13, 2012
