The U.S. Justice Department and a council of financial regulators should widen their investigation into possible manipulation of the London interbank offered rate, 12 Senate Democrats said yesterday following a $448 million settlement with Barclays Plc.
“This scandal calls into further question the integrity of many Wall Street banks and whether our prosecutors and regulators are up to the task of regulating them,” the senators said in letters to Eric Holder, U.S. attorney general, and members of the Financial Stability Oversight Council, which is led by Treasury Secretary Timothy F. Geithner and includes Federal Reserve Chairman Ben S. Bernanke. “Much more needs to be done.”
The letter was signed by Senators Carl Levin of Michigan, Jack Reed of Rhode Island, Dianne Feinstein of California, Tom Harkin of Iowa, Sherrod Brown of Ohio, Jeff Merkley of Oregon, Robert Menendez of New Jersey, Patrick Leahy of Vermont, Sheldon Whitehouse of Rhode Island, Frank Lautenberg of New Jersey, Daniel Akaka of Hawaii and Jeanne Shaheen of New Hampshire.
Barclays, the second-biggest U.K. bank, agreed last month to pay 290 million pounds ($448 million) in regulatory fines for rigging Libor, which spurred resignations of the chairman, the chief executive officer and its chief operating officer. The fines raised speculation about penalties that may be imposed on other banks involved and the cost of lawsuits that follow.
“Just like the banks and executives they oversee, regulators who were involved should be held to account for any failures to stop wrongdoing that they knew, or should have known about,” the senators wrote.
The Federal Reserve Bank of New York today will release documents on troubles it detected with Libor during the financial crisis, a spokeswoman said yesterday.
The documents “will show that the New York Fed took prompt action four years ago to highlight problems with Libor and press for reform,” said the spokeswoman, Andrea Priest.