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Federal Reserve Board Chairman Ben Bernanke speaks during a news conference June 20, 2012 in Washington, D.C. Senators are likely to question Bernanke about what banking regulators knew about manipulation of key lending rate. - 

Jeremy Hobson: Fed Chairman Ben Bernanke will testify today before the Senate Banking Committee. He's expected to address the standard issues: Will there be more monetary stimulus? What about the shaky recovery and the so-called fiscal cliff?

But as our Washington bureau chief John Dimsdale reports, lawmakers are also likely to ask Bernanke about a new issue.

John Dimsdale: The Federal Reserve knew four years ago that big multi-national banks were illegally manipulating a benchmark lending rate, called LIBOR. Set in London, the index is used to establish lending rates for trillions of dollars worth of loans around the world. Other than alerting the British central bank, there’s no evidence so far the Fed did anything else.

James Angel:  The real question is what did Ben Bernanke know and when did he know it.

James Angel is a finance professor at Georgetown University.

Angel: And why has it taken so long for regulators to do anything about this? This scandal was publicly reported in the financial press in 2008.

Yes, regulators had other issues to deal with in 2008 as banks were collapsing around them. But what about a fix for the future? Karen Petrou at Federal Financial Analytics doesn’t expect Bernanke to propose reforms.

Karen Petrou: If he does, I think it will be to recommend these kinds of rates cease to be set in an industry matter and that central banks like the Fed should take a much more direct and regulatory role in setting key indices.

In other words, more government regulation. That would send us back to another old debate in Washington.

I’m John Dimsdale for Marketplace.