Bank of England denies it’s to blame
- Last Updated: 1:40 AM, July 10, 2012
- Posted: 1:16 AM, July 10, 2012
A top Bank of England official denied hinting to Barclays executives that they should falsify a key interest rate benchmark during the height of the financial crisis in 2008.
“Absolutely not!” Bank of England’s deputy governor, Paul Tucker, told a UK parliamentary committee examining a growing rate-rigging scandal that has ensnared England’s second biggest bank and implicated regulators.
Tucker requested the hearing to defend against accusations that he encouraged former Barclays boss Bob Diamond during a 2008 phone call to lower the bank’s submissions as part of a process that determines the London interbank offered rate, or Libor.
Tucker, who is considered a candidate to succeed Mervyn King as governor of the BOE, testified five days after Diamond was grilled by the same Treasury Select Committee.
Critics allege that the central bank wanted to make the financial system appear healthier during the crisis by encouraging firms to lower their Libor submissions.
Barclays has agreed to pay a $450 million fine to UK and US regulators to settle charges that its traders rigged Libor.
The scandal, which has been under investigation for nearly three years, prompted the resignations of Diamond, Chief Operating Officer Jerry del Missier and Chairman Marcus Agius.
Tucker said that the central bank was surprised by the findings of the rate-rigging inquiries and never thought there was a problem with the system.
“We knew about the inquiries, we knew the suspicions but we didn’t know what [the investigations] were going to show,” Tucker told lawmakers.
Still, he faced criticism that the BOE missed apparent signs of trouble with the Libor-setting process.
“This doesn’t look good, This doesn’t look good, Mr. Tucker,” said Treasury Select Chair Andrew Tyrie, referring to minutes from a meeting noting that central bankers had expressed concerns about Libor.