Watchdog Says Libor Use in U.S. Bailouts Should Be Stopped

The watchdog for the U.S. financial crisis bailout program said the Treasury Department and Federal Reserve should stop using the London interbank offered rate for transactions tied to the Troubled Asset Relief Program.

“We can’t continue to use for TARP a measure in which there’s no confidence or assurance that it’s reliable, which could potentially be subject to manipulation,” Christy Romero, special inspector general for TARP, said in an interview. The Treasury’s Public-Private Investment Program, or PPIP, and the Fed’s Term Asset-Backed Securities Loan Facility, or TALF, should use rates other than Libor, she said.