Bank of England's Tucker To Testify on Rate Rigging Row
Paul Tucker, deputy governor of the Bank of England, will appear before lawmakers examining Barclays and other banks suspected of manipulating Libor, the interbank lending rate that underpins trillions of dollars of contracts around the globe. He appears at 3:30 GMT.
Earlier this month, Barclays was fined a record $450 million by U.S. and UK regulators for conspiring to rig Libor rates between 2005 and 2009, plunging the bank into crisis and triggering a brawl between politicians over who was to blame.
Brussels also stepped up its involvement in the probe and said it intends to propose new rules that would criminalize the manipulation of indexes such as Libor.
"We need to draw lessons from the Libor case," said a spokesman for Michel Barnier, the EU Commissioner in charge of financial regulation. "We intend to close the regulatory gap in our proposed market abuse legislation by including the direct manipulation of market indexes such as Libor."
The BoE's Tucker asked to appear before the lawmakers' panel to clarify his position after questions over his role in the scandal. Barclays is among more than a dozen global banks under investigation by authorities in North America, Europe and Japan, but the only one so far to admit wrongdoing.
Barclays says some of its traders tried to manipulate Libor to improve their trading positions, and also says it wrongly lowered its estimates of the interest it paid other banks at the height of the financial crisis in 2008, to make its health appear better in comparison.
[See Related: The Barclays LIBOR Fallout in Quotes]
An internal email released by Barclays last week drew Tucker into the scandal, showing that in October 2008 Tucker told Bob Diamond, then Barclays investment bank boss and later its CEO, that top officials questioned why Barclays rates were so high.
"Mr Tucker stated the levels of calls he was receiving from Whitehall were 'senior' and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently," Diamond wrote in 2008.
Barclays has said Diamond's deputy, Jerry del Missier, understood Tucker's comments as a green light to fiddle rates.
Diamond deflected blame from Tucker last week, telling the Treasury Select Committee he did not take Tucker's warning as an instruction to lower Libor estimates, and that del Missier had misunderstood it.
Diamond and del Missier quit Barclays on Tuesday. Several sources have said the BoE and financial regulator had made clear they wanted Diamond to go.
The Bank of England declined to comment on Diamond's note. Before it was released, a bank spokesman said: "It is nonsense to suggest that the Bank of England was aware of any impropriety in the setting of Libor." Tucker has not commented himself.
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