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In the UK, the Libor rate-fixing scandal deepens as evidence emerged that U.S. Treasury Secretary Timothy Geithner wrote to the Bank of England in 2008 voicing his concerns about risks relating to the London Interbank Offered Rate.
Geithner sent a memo to London, U.S. regulators also began voicing concerns about possible distortions of Libor and heir impact.
Among six recommendations made by Geithner was a call for greater governance of the market.
He suggested the British Banking Association, which sets the Libor based on data submitted by different banks, issue best practice guidelines and randomly collect qoutes from banks in order to help eliminate incentives to “mis-report” rates.
The revelation came as it also emerged the 11 global banks so far linked to the Libor scandal may face $14 billion in regulatory and legal settlement costs through 2014.
Estimates by Morgan Stanley analysts suggested the damping effect that rate-rigging accusations may have on market share and activity would mean earnings and book value could be reduced even further.
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