Monday, April 10, 2017

HOT: A Secret Recording Implicates the Bank of England in Libor Rigging

By Robert Wenzel

A 2008 recording is said to implicate the Bank of England in the Libor rigging scandal, reports Courtney Goldsmith for City A.M.

The secret recording, uncovered by the BBC, adds to evidence the BoE repeatedly pressured commercial banks to lower their benchmark rates during the 2008 financial crisis.

Barclays manager Mark Dearlove is quoted as saying: "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."

Westminster's powerful Treasury Select Committee. members Stephen Hammond and Chris Philp have both told City A.M. they back an enquiry into the reports, with Philp saying the committee "should urgently investigate what happened," reports Mark Sands at City A.M. 

Hammond added: "The more [that] is revealed the more obvious the need for an enquiry is. This may well have legal ramifications."

The recording could raise fresh questions about oral evidence from former Barclays chief Bob Diamond and Bank of England deputy governor Paul Tucker to the Treasury Committee in 2012.

Asked if Diamond, Tucker, and Bank of England governor Mark Carney should all face further questions from MPs, Philp replied: "Yes. They all have questions to answer."

I have often stated that it would be difficult for LIBOR traders to manipulate rates other than for very short time frames (seconds?) but when a central bank is in the game muscling traders, it is a completely different story.

Bring on the investigation!

Robert Wenzel is Editor & Publisher of and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics, on LinkedIn and Facebook. The Robert Wenzel podcast is on  iphone and stitcher.

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