Fed knew about Libor rate fixing in 2007

10 July 2012

The Federal Reserve Bank of New York was aware of the Libor rate scandal in 2007.

According to a report in Reuters, the institution knew how the global benchmark interest rate was being set was flawed.

A spokesperson for the New York Fed stated further discussions took place with Barclays in 2008 to find out how Libor submissions were being conducted.

"We subsequently shared our analysis and suggestions for reform of Libor with the relevant authorities in the UK," the representative stated.

Barclays has already agreed to pay $453 million to British and US regulators as a result of the fallout from Libor and the New York Fed's submission could raise questions about whether enough action was taken four years ago.

The reason the scandal has provoked such an outrage is that manipulating the Libor rate allows banks to make profits or avoid losses by gambling on the direction of interest rates.

By Gary Cooper

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