* FSA to publish internal Libor report before April
* CFTC chairman says cannot guarantee Libor is clean
By Huw Jones
LONDON, Feb 21 (Reuters) - Britain's Financial ServicesAuthority (FSA) will publish its internal review into when itfirst knew about banks rigging the Libor benchmark within weeks,before the watchdog is scrapped.
The UK watchdog told parliament's Treasury Select Committeein a written submission released to the media that the reviewwas being conducted by its internal audit division.
The FSA was responding to the committee's report last yearon the Libor scandal. Two UK banks, Barclays and RoyalBank of Scotland have been fined for manipulating theLondon Interbank Offered Rate, used as a reference rate intransactions from home loans to credit cards.
Members of the committee were concerned that the watchdogwas two years behind U.S. regulatory authorities in startingformal investigations. The FSA said in its submission that ithad worked jointly with the U.S. authorities since 2008.
The committee wants the FSA's internal probe published.
"The Treasury Committee will consider the FSA's review intoits own awareness of inappropriate Libor submissions when it isfinalised," the committee's chairman Andrew Tyrie said in astatement on Thursday.
"Some of the evidence we hear suggests early warning signsmay have gone unheeded," Tyrie said.
An FSA spokesman said the review is expected to be publishedwithin the next two to three weeks.
The committee has been pressing the FSA to give greaterencouragement to whistleblowers from banks to report wrongdoing.
'TERRIFIC PARTNER'
"We are currently preparing a note on incentivisingwhistleblowing without moral hazard," the FSA said in itssubmission. FSA head of enforcement Tracey McDermott has alreadytold parliament that she does not favour paying whistleblowers.
The FSA will be scrapped at the end of March and its powersdivided between the Bank of England and a new standaloneFinancial Conduct Authority as part of a post-crisis shake-up.
Gary Gensler, chairman of the Commodity Futures TradingCommission, one of the regulators that imposed fines on Barclaysand RBS, said that it has worked with the FSA for four years andthat it was a "terrific partner on these enforcement cases".
He reiterated his wish to see Libor - which is used to pricesome U.S. home loans - based on actual transactions rather than"something that doesn't exist".
"The real core issue is there may be no real market here, noreference rates referred to. In fact, like estate agents, theyare making it up in some way," Gensler said in a BBC interview,adding that he could not guarantee that the Libor market wasclean.
FSA managing director Martin Wheatley, who is writing ajoint report with Gensler on future reform of Libor at theglobal level, has said that it is not possible to make animmediate shift to basing Libor on real transactions.
Thomson Reuters, parent company of Reuters, has beencalculating and distributing Libor rates for Libor's sponsor,the British Bankers' Association, since 2005.
Barclays (BARC)
