Bank of England Pressured Banks to Lower Libor Rates

Secret recording of Barclay’s manager reveals the Bank of England pressured commercial banks

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Credit Adrian Pingstone

The Bank of England has been dragged into a Libor scandal after BBC Panorama secretly recorded a senior Barclay’s manager and a Libor submitter. The recording shows that the Bank of England pressured banks into pushing down their Libor rates during the 2008 financial crisis.

In the recording, the manager says, “”The bottom line is you’re going to absolutely hate this… but we’ve had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower.”

The submitter then protests, “So I’ll push them below a realistic level of where I think I can get money?”

The manager then responds, “”The fact of the matter is we’ve got the Bank of England, all sorts of people involved in the whole thing… I am as reluctant as you are… these guys have just turned around and said just do it.”

The recording is believed to date back to 29th October 2008 and it has thrown doubt onto the evidence submitted by former Barclays boss Bob Diamond and Paul Tucker, who was the deputy governor of the Bank of England before retiring to the Treasury select committee in 2012. At the time, they said they had only just become aware of such lowballing.

The recording was played before Chris Philip MP, a committee member of the Treasury, who said:

“It sounds to me like those people giving evidence, particularly Bob Diamond and Paul Tucker were misleading parliament, that is a contempt of parliament, it’s a very serious matter and I think we need to urgently summon those individuals back before parliament to explain why it is they appear to have misled MPs. It’s extremely serious.”

However Mr. Diamond objected, telling the BBC; “I never misled parliament. I stand by everything I have said previously.”

 

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