WASHINGTON, July 25 (UPI) -- Lawmakers in Washington Wednesday grilled Treasury Secretary Timothy Geithner on his early reaction to the Libor rate-setting scandal.
The harsh questioning came mostly from Republicans on the House Committee on Financial Services, while several Democrats were more forgiving of Geithner, who learned banks were manipulating the London interbank offered rate, or Libor, as far back as 2008.
British bank Barclays recently settled a case with regulators by agreeing to pay $450 million for attempting to manipulate the rate that is a benchmark rate for trillions of dollars of commercial and personal loans.
One of Geithner's lines of defense was that the Libor, which is set by a banking association in London, was a British problem.
At the time, a period in which he was president of the New York Federal Reserve, he alerted other regulators. The Fed at the time also forwarded a set of changes to the Libor process that would make it harder to manipulate, Geithner said.
"We gave them very specific detailed changes. If more of those would have been adopted sooner, you would have limited the risk," Geithner said.
Geithner's testimony centered on progress of the Financial Stability Oversight Council, specifically the second annual report on the council that was created by the Dodd-Frank financial overhaul bill.
Geithner said financial regulations have improved in the past two years. "We now have the ability to put the largest financial companies under enhanced supervision and prudential standards, whether they are banks or non-banks," Geithner said.
He said nine of the country's largest banks had submitted "living wills," that would serve as guides for orderly transitions, should any of them fail.
Republican lawmakers, however, centered questions on why Geithner did not pursue legal confrontations with banks over Libor manipulations, instead of addressing the issue with broader regulatory brushstrokes.
They wanted to know why Geithner did not charge any banks with a crime in 2008.
"What was being disclosed here was fraud," said Rep. Randy Neugebauer, R-Texas.
"We took the initiative to bring those concerns to the broader regulatory community. I believe we did the necessary and appropriate thing very early in the process," Geithner said.