Republican lawmakers are criticised Treasury Secretary Timothy Geithner for failing to alert Congress four years ago that banks could manipulate a key global interest rate.
Mr Geithner defended his actions at a hearing today of the House Financial Services Committee.
Mr Geithner, who was then president of the Federal Reserve Bank of New York, said he immediately alerted US and British regulators in 2008 when he learned of problems with the London interbank offered rate, or LIBOR. He also said the problems were written about in the financial media.
"I felt that we did the important and fully appropriate thing," Mr Geithner testified.
But Scott Garrett, a New Jersey Republican, asked why he did not tell Congress.
"You have appeared before this committee countless times since 2008," Mr Garrett said. "Why did you never mention it to the committee?"
Britain's Barclays bank admitted last month that it had submitted false information to keep the rate low. The bank was fined $453 million in settlements with US and British regulators, and its chief executive resigned.
Documents show the New York Fed learned in 2007 that Barclays was manipulating the rate.
Other major banks, including Citigroup Inc. and JPMorgan Chase & Co., are under investigation for similar violations.
A British banking trade group sets the LIBOR every morning after international banks submit estimates of what it costs them to borrow money. The rate affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.
Some Republican lawmakers also asked Mr Geithner why, as president of the New York Fed, he used a rate he knew in 2008 to be flawed as the basis for billions of dollars in bailout loans to big financial companies in the crisis.
He also warned in his testimony that Europe's debt crisis and a looming budget crisis in Washington could weaken an already-fragile US economy. He told the panel that regulators must pursue stricter oversight of the financial system to help stabilize the economy.
EC proposes to make rate-fixing criminal offence
The European Commission has proposed to make the manipulation of benchmarks, including LIBOR and EURIBOR, a criminal offence.
In a statement it said that the recent LIBOR scandal raised serious concerns about false submissions of banks' estimated interbank lending rates.
It added that "any actual or attempted manipulation of such key benchmarks can have a serious impact on market integrity."
It said that this could result in "significant losses to consumers and investors, or distort the real economy."
The Commission has adopting amendments to the proposals for a Regulation and a Directive on insider dealing and market manipulation, including criminal sanctions, initially tabled on October 20 2011.
It is asking each member state to provide for criminal sanctions in its national laws to cover the manipulation of benchmarks. It is not at this stage proposing to set the minimum types and levels of criminal sanctions.
Barclays was hit with £290m fine over Libor fixing.
