U.S. Treasury Secretary Timothy Geithner said on Tuesday that he advocates a “very powerful and credible” regulatory enforcement response in the U.S. financial system following allegations of manipulation of a benchmark interest rate.
Geithner said in an interview with Bloomberg Television that American regulators should carefully examine evidence of abuse in the rate-setting process of the London interbank offered rate, commonly known as a Libor, “to make sure that we can deal with the potential implications of this for the broader financial system,” The Wall Street Journal reports.
Additionally, Geithner urged Congress to take advantage of decreased borrowing costs that could be used to aid a fragile recovering U.S. economy.
“We pay about 1.5 percent for a 10 year Treasury now, to borrow long-term now, because fundamentally people have faith in the ability of the U.S. to solve its problems,” Geithner said, according to The Wall Street Journal. “It’s sensible for us to take advantage of this moment to do things that will make the economy stronger.”
Recently released documents revealed that the New York Federal Reserve knew of Libor manipulation as early as 2008. Geithner, who was the head of the New York central bank at that time, and Ben Bernanke, the chairman of the Federal Reserve, have come under heavy scrutiny from congressional Republicans regarding their knowledge of and actions after evidence of Libor manipulation surfaced.