US lawmakers said Tuesday they will question Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke about a bank rate-rigging scandal that has engulfed the global financial sector.
Members of the powerful US Senate Banking Committee said the top two US economic policymakers should brace for questions about the manipulation of the Libor interbank lending rate.
The scandal, which ignited with British bank Barclays's being fined for trying to rig the rate, has called into question a key plank of the global banking system.
The Libor rate is used as a reference point for a range of consumer interest rates across the world, from US credit cards to European mortgages.
"It is important that we understand how any manipulation may impact American consumers and the US financial system," Senate committee chairman Tim Johnson said in statement.
"The Banking Committee will hold hearings in July with Treasury Secretary Geithner and Federal Reserve Chairman Bernanke, and I am asking them to be prepared to answer senators' questions on this matter."
The Fed chairman is likely to face a particularly rough time from lawmakers.
As well as being a central bank, the Fed is a watchdog for many of the banks that set the Libor, including Barclays.
Questions have been raised about when the Fed detected foul play, whether it did enough to stop it and whether the issue was put on the backburner because Wall Street was at the time in the throes of the 2007-2008 financial crisis.
According to David Kotok, chairman of Cumberland Advisors, the scandal raises questions about whether Fed surveillance was good enough and what it will do now.
Kotok suggested guilty banks could losing their prime-dealer status, a much-coveted and lucrative status bestowed by the New York Fed, which allows banks to buy US bonds directly from the government.
"We wonder what message would be sent if the NY Fed now took Barclays out of the primary dealer lineup for a penalty period. And we wonder what the market will think if the NY Fed does nothing," he said.