-UK TSC: Barclays didn’t need nod, wink from BOE to rig Libor
-UK Tsy Says Libor Manipulation Points To Culture Irresponsibility
-UK Tsy: Govt Aims To Mend Banking Culture As Quickly As Poss

LONDON (MNI) – The Treasury Select Committee’s preliminary report
into Barclays’ Libor rigging has downplayed the importance of Bank of
England Deputy Governor Paul Tucker’s role in the scandal.

The report’s only sharp criticism of Tucker relates to his failure
to ensure there was a note of his now infamous telephone conversation
about Libor with ex-Barclays Chief Executive Officer Bob Diamond. The
TSC even suggests that the importance of the Tucker/Diamond call may
have been hyped to distract from the real scandal of Libor rigging.

The UK Treasury welcomed the TSC report, saying it would study the
findings “in depth”.

A Treasury spokesperson stated:

“The manipulation of key global benchmark rates has been another
example of a culture of irresponsibility within the banking system,
which the Government is determined to fix as quickly as possible”.

Tucker has long been seen as the leading internal candidate to take
over the Governorship of the BOE when Mervyn King’s current term comes
to an end on June 30 next year. Had the TSC report accused Tucker of
wrongdoing, or questioned his integrity, it could have derailed his
leadership bid but instead it puts the spotlight on Barclays’ wrongdoing.

Barclays was fined Stg290 million in late June this year for
attempting to manipulate Libor, with regulators referring to the bank’s
price rigging both before, and at the height of, the financial crisis.
Tucker became embroiled in the scandal when Barclays revealed a note
written by Diamond back in October 2008 summarising a conversation
between him and the BOE official.

The note said that Tucker had talked to Diamond about Barclays’
Libor submissions being higher than other banks’ and that Tucker had
said “it did not always need to be the case that we (Barclays) appeared
as high as we have recently.”

The note was seized on in the media as evidence that Tucker may
have condoned Barclays’ Libor fixing. Tucker, however, denied the note
was an accurate reflection of his conversation with Diamond and he
strongly denied in evidence to the TSC that he had given the green light
to Barclays to artificially lower its Libor rates.

“We will never know the details of the discussion between Mr Tucker
and Mr Diamond,” the TSC report says, before raising the possibility the
conversation’s importance as deliberately overplayed.

“It remains possible that the entire Tucker-Diamond dialogue may
have been a smokescreen put up to distract our attention, and that of
outside commentators, from the most serious issues underlying this
scandal,” the report said.

The regulators found Barclays guilty of Libor rigging on repeated
occasions and the TSC said the bank had shown it was perfectly capable
of rigging the interbank rate without the need for Tucker’s approval.

“It is unclear to the Committee why Barclays has attempted to place
such weight on the Tucker-Diamond phone call given the pattern of
repeated dishonesty in Libor submissions in the months running up to
this phone call,” the report says.

“Barclays did not need a nod, a wink or any signal from the Bank of
England to lower artificially their Libor submissions. The bank was
already well practised in doing this,” the TSC report adds.

Tucker’s haphazard approach to note-taking comes in for some
strong criticism.

“The lack of a record by the Bank of England of the conversation
between Mr Tucker and Mr Diamond is of great concern,” the report says,

The committee simply calls on the BOE to review its note keeping
systems.

In the report, the TSC raises concerns over the roles played by
King and the head of the Financial Services Authority, Adair Turner,
another candidate for the BOE Governorship, in forcing Diamond out of
the top job at Barclays. The two made clear to the Barclays board that
change was needed at the top in the wake of the Libor scandal.

The TSC says it is troubled by the power the two demonstrated to
force a private sector employee out of a job.

“Whatever the merits of the action taken by the Governor of the
Bank of England and the Chairman of the FSA – and the Committee has
sympathy with the conclusions they had drawn about the leadership of
Barclays – the action they took has exposed implicit, and potentially
arbitrary, power to force out senior figures in the financial services
industry,” the report concludes.

The Government has already charged s senior FSA official Martin
Wheatley with a high-level review of Libor. Wheatley published a
discussion document last week which invites submissions from the
financial industry. It will produce recommendations by the end of the
summer.

The Treasury said tonight that “any necessary legislative changes”
arising from the Wheatley Review would be considered for inclusion in
the Financial Services Bill or the Banking Reform Bill.

-London newsroom: 00 44 20 7862 7491; email: drobinson@marketnews.com/
dthomas@marketnews.com

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