King Supported Geithner's 2008 Libor Reforms

The Bank of England governor supported Libor reforms suggested by a key US official, months before the issue was raised with Barclays (LSE: BARC.L - news) .

According to correspondence released by the Bank of England (BoE), Sir Mervyn King supported proposals suggested by the then New York Federal Reserve president Timothy Geithner in 2008.

In an email released by the BoE, Sir Mervyn wrote to Mr Geithner and said: "The recommendation so proposed by the New York Fed seem sensible to us.

"We will ask the BBA (British Bankers' Association) to include in their consultation document the ideas contained in your note."

Mr Geithner, now US Treasury Secretary, had warned the BoE about Libor rate problems four years before Barclays was fined over a fixing scandal.

At the time Angela Knight was head of the BBA, which was conducting a review of the Libor-setting process.

The email from Mr Geithner was sent on June 1, 2008, to Sir Mervyn and CCed to deputy governor Paul Tucker.

Ms Knight emailed Mr Tucker and said: "Changes are being mae to incorporate the views of the Fed. There is no show stopper as far as we can see.

"I have spoken to the CEOs and made people sign confidentiality agreements, but as you know there are a lot of vested interests."

It raised concern about the Libor inter-bank lending rate - a reference point for a range of worldwide consumer rates, from credit cards to mortgages - according to reports.

Mr Geithner recommended eliminating incentives for bad behaviour and establishing a "credible reporting procedure".

His memo included six points on how to improve the governance of the Libor rate.

More emails are expected to be released this afternoon by the Federal Reserve of New York (Frankfurt: A0DKRK - news) , as the Libor rate-fixing scandal spreads.

Last month, Barclays was fined £290m by US and UK regulators over its Libor manipulation attempts.

The bank's share price plunged and led to the resignation of chairman Marcus Agius and CEO Bob Diamond.