HLE blogger David Allan ponders the Barclays controversy
"For those who are partial to conspiracy theories, Paul Tucker’s evidence to the Treasury Select Committee on 9 July was a real treat.
This is about as close as we are likely to get to evidence of a conspiracy at the top-level of society with international ramifications.
Barclays has accepted a fine of £290m by the Financial Services Authority and US regulators for its involvement in manipulating the LIBOR rate—a bundle of interest rates that tell investors what banks have to pay to borrow money. Part of the admitted wrongdoing involves Barclays’ staff deliberately submitting figures suggesting that Barclays was able to borrow money more cheaply than was in fact the case between 2007–2009. The purpose of this was to try and ease concerns over Barclays’ financial strength and prevent a run on the shares and possible nationalisation of the bank.
In what amounts to a “sensational disclosure” in banking terms, on the day of the resignation of Bob Diamond, the CEO of Barclays, the bank published an e-mail from 29 October 2008 which purported to be a contemporaneous note of a telephone conversation between Diamond and Tucker, a deputy governor of the Bank of England, in which Diamond appeared to be passing on Barclays’ suspicions that other banks were manipulating their LIBOR figures to Tucker. According to the note, Tucker expressed reluctance to take this complaint any further. Instead, on one interpretation of what was recorded, he gave tacit consent on behalf of the Bank of England for Barclays to falsify their figures in the same way.
This might provide a defence for any Barclays’ staff indicted with LIBOR manipulation because they may be able to say that as far as they believed they were acting honestly—with the consent of the Bank of England...”
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