Bank of England Deputy Governor Paul Tucker may be asked to give his version of events to lawmakers over a telephone call with Barclays Plc (BARC)’s Robert Diamond as the Libor furor intensifies.
George Mudie and Andy Love, opposition Labour Party members of the Treasury Committee who will question Diamond in Parliament today, said Tucker should also testify. His name was drawn into the fray after the lender released a note of a 2008 call purporting to show that Tucker, the central bank’s markets director at the time, hinted the firm could cut its Libor rates.
“It doesn’t look good,” said Stewart Robertson, chief European economist in London at Aviva Investors (AVGHYAU), which manages about 263 billion pounds ($413 billion). “It sullies Tucker’s squeaky-clean image. Yes, he should be called, and he’ll have to do some fighting. The question is, can they prove it?”
Diamond, Marcus Agius and Jerry Del Missier resigned as Barclays’s top officials after regulators fined the bank a record 290 million pounds for attempting to rig the London interbank offered rate for profit.
An Oct. 30, 2008, e-mail from Diamond, then the Barclays investment-banking chief, to John Varley, chief executive officer at the time, reads that “Tucker stated that 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.”
“Barclays have a vested interest in throwing up a smokescreen and it is no surprise to me that allegations have surfaced from Barclays that they were given a nod by Bank of England officials,” Conservative lawmaker David Ruffley said. “Let us see if Mr. Diamond is going to put his money where his mouth is. Is he going to be asked about it? Of course he is.”
Ruffley, a former adviser at the U.K. Treasury, added that if Diamond repeats the allegation today, Tucker would have to be asked to testify on the matter.
Tucker “will want to be called before the committee,” Mudie said in an interview. “He is a clear candidate for the governorship of the Bank of England and he won’t want this hanging over him.”
Love, who said the committee will want to speak to Tucker “in particular” as well as other Bank of England officials “to hear their side of the story,” also called for transcripts of the phone conversation to be published.
A Bank of England spokesman declined to comment. Paul Myners, a Labour Party lawmaker in Parliament’s upper House of Lords, who was minister for the City, London’s financial district, under the last administration, denied he was the source as did Ed Balls, the Labour Treasury spokesman who was a Cabinet minister at the time.
Tucker was already a possibility to appear before the committee as part of the central bank’s regular testimony regarding its Financial Stability Report, published last week.
The Treasury Select Committee will confirm next week details of testimony by Bank of England officials for the report, said a person familiar with the matter who declined to be named because he was authorized to speak on the record.
The officials’ appearance is likely to happen before Parliament ends its current session on July 17. Decisions on whether any other officials will be called before the panel in connection with today’s testimony by Diamond won’t be decided until after his appearance.
“I can say quite categorically I didn’t speak to Paul Tucker or anybody at the Bank of England about the Libor rate- setting process,” Myners told BBC Radio 4’s “Today” program today. He added that no one else at the Treasury under former Chancellor of the Exchequer Alistair Darling was responsible either.
“I am absolutely sure Paul Tucker will have a recording of the conversation or he would have had his private secretary listening to the call. Paul Tucker will have his own contemporaneous record of that conversation. The Tories are putting a lot of flak up, trying to take attention away from their role.”
Balls told BBC television that “at no point did I have any conversation with Mr. Tucker at all.”
Libor, which is determined by 18 banks’ daily estimates of how much it would cost them to borrow from one another for different time frames and in various currencies, is the benchmark for more than $360 trillion of securities, including mortgages, student loans and swaps.
Conservative lawmaker Mark Garnier, who also sits on the Treasury committee, said he would have liked to have questioned Diamond while in post.
“I’d rather he was there as chief executive as Barclays Bank because I want to grill him on the basis that he was responsible not only to us but to his employees and his shareholders,” he said in an interview. “Now he’s just a rich bloke on who’s on holiday.”
“People want to see bankers go to prison. The wider public is really angry. They know they are really angry with bankers because they have done something wrong. What they don’t know is what they have done wrong,” Garnier said.
Stewart Hosie, another committee member and a lawmaker for the Scottish Nationalist Party, said there is “a huge amount of unhappiness both in Parliament and in the general public.”
“We are at the start of the beginning,” Hosie said. “It’s only once we get through who knew what and when will we be able to chart accurately the way forward.”
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