Timothy Geithner got it right during his appearance before the Senate Banking Committee last week. “We’ve seen a devastating loss of trust in the integrity of the financial system,” the treasury secretary told the panel. The meltdown on Wall Street four years ago was the product, in part, of bankers run amok, failing at their core task of managing risk, driving for quick gains at the expense of larger responsibilities.

Now comes a new outrage, seeming confirmation of the rottenness in high finance. The scandal goes by the name of LIBOR, or the London Inter-Bank Offered Rate, a key measure of the average interest rate banks charge to lend to one another. In June, Barclays of London struck a $450 million settlement with American and British authorities in the wake of accusations that it manipulated the rate to gain an advantage.

That action has triggered a global investigation into more than a dozen big banks to see whether they, too, cooked the rate to bolster profits.

What did Barclays precisely do? The LIBOR has depended on trust. The banks report the interest rates they are charging to Thomson Reuters, which calculates the average for the British Banking Association. Barclays abused the process. It apparently reported higher rates to improve its profit margins on trades. Then later, as the financial world shuddered, it low-balled the rate to make its financial position look better, easing the likelihood of regulators taking more aggressive action.

All of this matters more widely because the LIBOR serves as a benchmark for setting the interest rates consumers pay via credit cards, mortgages and car loans. Push the rate higher through manipulation, and consumers pay more. True, the lower rate benefits consumers. Yet the practice amounts to fraud, banks falsifying their books, putting the financial system at greater risk, something that promises ill for practically everyone.

Worth noting is the LIBOR was a particular gauge for subprime loans and adjustable rate mortgages, providing another window into how rate fixing affects the economy as a whole.

On Capitol Hill last week, Secretary Geithner faced tough questions, mostly from Republicans, about his own role as the LIBOR mess began to develop. In 2008, Geithner led the Federal Reserve Bank of New York. A Barclays executive tipped off a New York Fed official about the dishonest rates. Geithner did not alert federal prosecutors. He pressed for an overhaul of the rate-setting process, recommending that British authorities “eliminate the incentive to misreport” the rate.

Records show that Geithner was much more forceful than his British counterparts in pushing for changes in policy.

Most telling, the LIBOR scandal reinforces the dark waywardness of big bankers. No question, regulation must be bolstered and improved. That is because bankers have proved they cannot be trusted, succumbing to temptation when left largely on their own. Bankers play an essential role in the functioning of the economy. Well-equipped regulators must be there to ensure that bankers do not neglect the public interest.