Democratic Senators Call for Libor Probe

WASHINGTON — Twelve Democratic senators have called for a U.S. investigation into any role banks and regulators may have played in the scandal over the London Interbank Offered Rate.

The senators, led by Sen. Jack Reed of Rhode Island, made their request in letters Thursday to Treasury Secretary Timothy Geithner, other members of the Financial Stability Oversight Council and Attorney General Eric Holder.

"We urge you to direct your staff to thoroughly investigate the banks and the process involved in setting Libor for any wrongdoing," the senators wrote. "Banks and their employees found to have broken the law should face appropriate criminal prosecution and civil action."

"We are similarly troubled by allegations that U.S. and foreign bank regulators may have been aware of this wrongdoing for years," they added. "Just like the banks and executives they oversee, regulators who were involved should be held to account for any failures to stop wrongdoing that they knew, or should have known about."

The letters also called on U.S. regulators to assess how Libor is determined, identify areas of concern and develop proposals for restoring market confidence.

Barclays, the British bank, has admitted that it provided rigged information about its own borrowing costs, which were used to help calculate Libor.

An American investigation could determine whether other banks also manipulated their submissions, and whether regulators were complicit with any wrongdoing, as has been alleged of British regulators.

In addition to Reed, the Senate letter was signed by Sens. Carl Levin, Dianne Feinstein, Tom Harkin, Patrick Leahy, Robert Menendez, Sherrod Brown, Jeff Merkley, Sheldon Whitehouse, Frank Lautenberg, Jeanne Shaheen, and Daniel Akaka.