NEW YORK ( TheStreet) -- The London Interbank Offered Rate is determined by the 16 banks participating in the London money market, including three of the U.S.-based "too big to fail" money center banks: Bank of America ( BAC), Citigroup ( C) and JPMorgan Chase ( JPM). Libor is set at 11:00 a.m. London time and is fixed for a 24-hour period. A major portion of global financing is pegged to Libor, including an estimated $500 trillion or more of the exotic credit derivatives that played a critical role in the 2008 credit crisis. During the "Great Credit Crunch" an easing of the Libor rate was the first signal that the crisis was subsiding, because Libor is a measure of lending confidence. Obviously if the Libor rate is rigged lower, it can only be done with collusion among the rate setters. U.S. Treasury Secretary Timothy Geithner was the president of the Federal Reserve Bank of New York when the credit crisis hit. It has been documented that in 2007 the New York Fed was alerted to suspiciously low Libor rate submissions. In 2008, Geithner discussed the issue with the governor of the Bank of England. It seems Geithner did not act prudently in an effort to stop this potential rate fraud right then and there. In my judgment, he chose to look the other way. After all, the artificially low Libor rate showed that the Federal Reserve's credit facilities were working to free up the credit markets. It also appears that the rate-setting banks did not want to post accurate rates. If one bank gave an individual rate higher than the other banks in the group it would have implied that that bank had to pay a higher rate to attract funding and would have raised questions about its health. This is not the first time that I opined that bank regulators do not properly apply regulatory guidelines. In my articles about regional and community banks I have discussed the regulatory guidelines that were put in place in December 2006 for commercial real estate loans. In my July 16 article "Assessing 29 Community Banks That Report Quarterly Results," I described the regulatory guidelines with regard to risk exposures in real estate lending. Instead of taking action when banks reported too much exposure to real estate loans, the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. ignored these guidelines because the real estate market was hot and the banking system was generating record revenue. Then came the "Great Credit Crunch." Since the end of 2007, the FDIC has had to close 452 banks and has put another 772 FDIC-insurance financial institutions on its problem list.