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LIBOR scandal: Will Feds target not just employees, but a whole bank?

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Documents released by the New York Federal Reserve show that US regulators were concerned about irregularities with the LIBOR rate setting. US Treasury chief Timothy Geithner, then head of the New York Fed, wrote to British regulators urging them to take action to correct the situation. Apparently little was done.

The LIBOR rate is determined when banks call the British Bankers’ Association to report what they paid to borrow large sums of money, ranging from overnight to one year. The rate is set at 11 a.m. each weekday and published by Thomson Reuters.

If the banks reporting their lending rates have been giving intentionally inaccurate numbers, that could be a crime, says Robert Mintz, a former prosecutor who is now a partner at McCarter & English in Newark, N.J.

“If you issue false statements and you know someone is relying on them, that is enough for criminal liability,” he says.

Mr. Keneally says the banks could be charged with “fraud.” 

Normally, in the case of a bank, a shot across the bow is usually enough to get the board of directors busy. That’s what apparently happened at Barclays, which agreed to pay a $450 million fine and allow its chief executive, Robert Diamond, and other top executives to resign.

An indictment would be the equivalent of a knockout. 

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