Treasury Secretary Timothy Geithner testified before Congress on Wednesday, deflecting questions regarding his role in the recent Libor scandal and vowing to pursue criminal investigations into the alleged abuses of major banks around the world.
U.S. and international authorities are currently conducting a multiyear investigation into allegations that more than 12 of the world’s biggest banks attempted to manipulate the London interbank offered rate, commonly known as Libor, in order to boost profits and dispel concerns regarding the health of the financial institutions.
Geithner has come under fire for what critics say was his lackluster approach to knowledge of the scandal when he served as head of the New York Federal Reserve in 2008. In April 2008, the New York Fed learned that Barclays was intentionally submitting artificial rates in order to influence Libor. Rep. Scott Garrett (R-N.J.) criticized Geithner for his response after learning of Libor manipulation.
“You’re the secretary of [the] treasury of the United States of America,” Garrett told Geithner during the hearing, NPR reports. “You had the authority for four years to come to us, lay out the problem and lay out the solutions. And, for four years, you didn’t do anything about it.”
Geithner responded by defending the actions of the New York Fed, saying that he and the central bank followed due process after learning of the potential scandal.
“Congressman [Garrett], in my judgment, the regulators did the necessary, appropriate thing in this context, and they started that process very early,” Geithner said, adding that the New York Fed found concerns regarding Libor credible and proceeded to alert U.S. and British authorities, according to NPR.
Legislators and members of the committee also voiced concern regarding the open investigation into the Libor scandal.
“We cannot lose sight of the fact that the Libor issue, at its core, is about fraud,” Sen. Tim Johnson (D-S.D.), the chairman of the Senate Banking Committee, said, according to DealBook. “I want you to commit to me and the American people that the administration will make sure that those involved in Libor fraud will be held accountable and prosecuted.”
Geithner assured the committee that all necessary steps will be taken to ensure that those involved in the scandal are brought to justice.
“Absolutely,” Geithner said, DealBook reports. “I’m very confident that the Department of Justice and the relevant enforcement agencies will meet that objective.”