Paul Tucker, deputy governor of the Bank of England (BoE), testified before Paliament on Monday. On Tuesday lawmakers got their chance at Marcus Agius, Barclays chairman. Meanwhile, reports of decades-long rate manipulation surfaced and a survey of Wall Street executives indicated that a surprisingly high number believe that misconduct is not just acceptable behavior, but a key to success.
Reuters reported that Tucker denied any suggestions that he was pressured by lawmakers to egg on banks in a manipulation of LIBOR and that in fact he was unaware of any such action on the part of financial institutions. In his testimony before the House of Commons Treasury Select Committee, Tucker was quoted saying, “This was a cesspit. We were not aware of it, other than what is starting to come out in these investigations. We didn’t have any knowledge, I didn’t have any knowledge.”
Tucker was alleged in a note released by Barclays to have commented on the Libor rate in a way that allowed misinterpretation by former Chief Operating Officer Jerry del Missier that manipulation of the rate was acceptable to avoid a panic in the marketplace. Del Missier stepped down last week.
In a MarketWatch report, Tucker said of the conversation referred to in the note, “The last sentence gives the wrong impression. It should have said something along the lines of ‘Are you, the senior management of Barclays, ensuring that you are following the day-to-day operations of your money market desk? Are you ensuring that they don’t march you over the cliff inadvertently by giving signals that you need to pay up for funds?’”
He then said he had “absolutely not” offered any encouragement to any bank to misstate its LIBOR submissions, and added, “Such collusion [among the banks] would never have occurred to me until the revelations of the last few weeks.”
On Tuesday, Agius took his turn in the hotseat, defending executive pay levels as an area in which the bank had done all it could.
“Banks and many other industries went into the financial crisis with a model of pay which was competitive as between the various different countries that they were operating in as a center,” he said, adding, “As the situation has come off, we have tried very hard to manage compensation down, we have tried very hard to achieve a far better balance as between the shareholders and between the employers. But there’s a natural limit to how far we can go.”