04 July 2012

Messier and missier

The plot thickens.  City AM reports:
... there was a decision from the top of Barclays – apparently, by COO Jerry del Missier, who also quit yesterday – to push down their Libor submissions to suggest that they were in a better position as a bank than they actually were. This policy was also pursued by other banks. What makes all of this explosive is that Barclays believes that it had informed the Bank of England that others were distorting Libor in 2008 – and that it only joined in after that conversation.
According to Bob Diamond’s version of events, Paul Tucker, the Bank’s deputy governor (and until now the frontrunner to become governor next year) sounded almost sympathetic to Barclays’ plight in a crucial telephone call, arguing that perhaps its rate needn’t be as high as it was and implying that senior Whitehall figures agreed. However, and somewhat confusingly, Barclays and the Bank both deny that Diamond was told or given the green light to cut his Libor submissions. Instead, del Missier is being blamed for having “misinterpreted” the memo.
Who knew what, and when? Did the Treasury under Labour know what was going on with Libor? How could it not have? What about the Bank of England? Why didn’t it act?
We also need to find out why Diamond suddenly performed a U-turn and resigned. Did Sir Mervyn King and Adair Turner tell the board to fire him, as seems to be the case? Did George Osborne endorse this? And did Diamond’s resignation have anything to do with the fact that Barclays had started to fight back and seemingly implicated the central bank in the whole affair?
We can expect further confusion when Diamond Bob testifies today to the Treasury Select Committee.

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