Geithner pressed British regulators in 2008 on Libor: report

WASHINGTON (Reuters) - While heading the Federal Reserve Bank of New York, Timothy Geithner acknowledged problems with the process for setting key interest rates during the 2008 financial crisis and pressed British regulators for reforms, reports said on Thursday.

The Washington Post, the New York Times and the Wall Street Journal said that Geithner, now U.S. Treasury Secretary, questioned the credibility of the London interbank offered rate, or Libor, with banks reportedly misrepresenting rates.

London-based Barclays is the only bank so far to admit any wrongdoing in giving false information as part of the complex process of setting Libor, in order to influence the pricing of derivatives and also to rebut speculation about the weakness of its balance sheet during the financial crisis.

Barclays agreed to pay fines of $453 million in a settlement with U.S. and U.K. officials. More than a dozen other banks are under investigation for activities between 2005-09.

The scandal so far has been mostly confined to London with public outcry that regulation in Britain was lax. But concern has grown about the wider impact on consumers and the involvement of U.S. regulators.

Libor is used for $550 trillion of interest rate derivatives contracts, as well as influencing rates on mortgages, student loans and credit cards.

Geithner suggested to the Bank of England that authorities "strengthen governance and establish a credible reporting procedure" and "eliminate incentive to misreport," the Times reported, citing documents.

"We would welcome a chance to discuss these and would be grateful if you would give us some sense of what changes are possible," Geithner wrote in an e-mail, according to the Post.

Geithner recommended that the British Bankers Association collect quotes from a number of different banks but randomly select a subset of them when determining the Libor, the Journal reported.

Neither the Federal Reserve Board of Governors in Washington nor the Federal Reserve Bank of New York offered any comment. Treasury officials could not immediately be reached.

Regulators are under growing pressure to explain what they knew and how they responded.

A group of Democratic U.S. senators pressured Attorney General Eric Holder and financial regulators on Thursday to step up investigations into rate manipulation.

U.S. state attorneys general are also jumping into the widening scandal, a move that could open a new front against the top global banks.

(Reporting By John Crawley; Editing by Kim Coghill)