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July 09, 2012 at 12:54 PM
Paul Tucker, deputy governor of the Bank of England (BoE), was to appear before Parliament to give his version of events described in a memo written by Bob Diamond, former CEO of Barclays, as he hoped to hold on to his position as likely successor to Mervyn King as governor of the bank.
Bloomberg reported Monday that Tucker sought the opportunity to testify about a telephone call between himself and Diamond in October of 2008 that, according to Diamond’s memo, seemed to suggest that Tucker proposed Barclays lower its Libor submissions. So far the Libor rigging scandal has claimed the jobs of Diamond, Barclays chairman Marcus Agius and the bank’s chief operating officer, Jerry Del Missier, as well as resulting in heavy fines for Barclays.
“It’s the battle of the titans where the powerful banker is pointing the finger at the guy who’s heading to be the next governor,” Marcus Miller, a professor at the University of Warwick, said in the report. Miller, who was doing research at BoE at the time of the phone call in question, was quoted saying, “Tucker may get asked about whether he counseled lowballing, and whether Diamond’s version of events is believable. I think he can save himself.”
Parliament’s Treasury Committee was set to begin its questioning of Tucker in London on Monday afternoon. Not only the issue of the phone call is expected to be addressed, but also an earlier meeting at which the issue of Libor rates was raised. The minutes of that meeting, which took place in November of 2007, said in part, “Several group members thought that Libor fixings had been lower than actual traded interbank rates through the period of stress. Libor indices needed to be of the highest quality given their important role.”
Feeling in Europe is running high over the Libor rigging scandal. Germany’s markets regulator BaFin was said on Friday in a Reuters report to have launched a “special investigation” into Deutsche Bank’s possible complicity in the rate manipulation, according to sources with knowledge of the matter. A special investigation launched by the regulator itself carries more severity than an investigation requested by an outside party.
The ire rises higher; no less a person than Michel Barnier, the European Union (EU) commissioner in charge of financial reform, said through a spokesman on Monday that he would propose new regulations to criminalize benchmark manipulation—that of Libor and other important financial icons.
Barnier intends to amend proposed legislation already intended to tighten rules prohibiting insider trading and other such activities so that it also includes protections against benchmark manipulation for such industry standards as Libor.
