Federal Reserve Chairman Ben Bernanke will be in the hot seat when he delivers his prognosis on the economy before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. But more than his expected gloomy economic forecast, lawmakers are likely to grill the Fed chief on the unfolding bank rate scandal.
His testimony will be the first crack lawmakers will have to publicly question a regulator about how banks allegedly rigged a global benchmark interest rate known as Libor. Lawmakers on both sides of the aisle are expected to grill Bernanke on what he knew and when, as well as how the Fed dealt with the reports internally.
"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," a group of twelve Democratic senators wrote in a Thursday letter to Attorney General Eric Holder and the members of the Financial Stability Oversight Council.
Republican Rep. Randy Neugebauer, who chairs the House Financial Services subcommittee on oversight and investigations, requested transcripts from the New York Fed's communications with Barclays on setting interbank offered rates during the financial crisis. They were published last week.
Bernanke was Fed chairman at the time the alleged rate-rigging was going on, and the documents published by the New York Fed reveal that the Fed Board of Governors was notified of potential rate-rigging in 2008. It's unclear what next steps were taken.