Britain's Barclays bank admitted last month that it had submitted false information to keep the rate low. The bank was fined US$453 million in settlements with U.S. and British regulators, and its chief executive resigned.
Documents show the New York Fed learned in 2007 that Barclays was manipulating the rate.
Geithner, who was then president of the Federal Reserve Bank of New York, defended his actions at a hearing Wednesday of the House of Representatives Financial Services Committee.
Geithner said he immediately alerted U.S. and British regulators in 2008 when he learned of problems with the London interbank offered rate, or LIBOR. He also said the problems were written about in the financial media.
"I felt that we did the important and fully appropriate thing," Geithner testified.
But Rep. Scott Garrett, a Republican, asked why Geithner didn't tell Congress.
"You have appeared before this committee countless times since 2008," Garrett said. "Why did you never mention it to the committee?"
Rep. Brad Miller wanted to know whether Geithner had informed the Justice Department about the problems.
Geithner said he had not.
Other major banks, including Citigroup Inc. and JPMorgan Chase & Co., are under investigation for similar violations.
The European Union proposed Wednesday to make manipulating the Libor and other key global interest rates a crime.
A British banking trade group sets the LIBOR every morning after international banks submit estimates of what it costs them to borrow money. The rate affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.
Some Republican lawmakers also asked Geithner why, as president of the New York Fed, he used a rate he knew in 2008 to be flawed as the basis for billions of dollars in bailout loans to big financial companies in the crisis.
Geithner also warned in his testimony Wednesday that Europe's debt crisis and a looming budget crisis in Washington could weaken an already-fragile U.S. economy. He told the panel that regulators must pursue stricter oversight of the financial system to help stabilize the economy.