Tim Geithner, then the president of the New York Federal Reserve, thought it was enough of a problem that he held a “fixing LIBOR” meeting. “Fixing” as in it is broken, not in the sense that the Fed was trying to game the index. They’d never write that down.
Regardless it appears that the Fed knew what was going on. It knew that the second most important interest rate in the world was below what it should have been. Yet it looked the other way.
I suppose in the end the Fed didn’t have a problem with repressing market rates of interest seeing as it actively represses rates itself.
“According to the calendar of then New York Fed President, Timothy Geithner, who is now U.S. Treasury Secretary, it even held a “Fixing LIBOR” meeting between 2:30-3:00 pm on April 28, 2008. At least eight senior Fed staffers were invited.
It is unclear precisely what was discussed at this meeting or who attended. Among those invited, along with Geithner, was William Dudley, who was then head of the Markets Group at the New York Fed and who succeeded Geithner as its president in January 2009. Also invited was James McAndrews, a Fed economist who published a report three months later that questioned whether Libor was manipulated.”