Libor rate-fixing: a scandal growing by the day
The thing just gets bigger. Now both Brussels and Washington have declared an interest in getting involved in the Barclays/Libor scandal.
Michel Barnier, the EU Commissioner who deals with financial services is already proposing EU legislation to go where UK legislation has so far failed to go.
Barnier wants the full force of EU-wide rules to outlaw the manipulation of either the Libor or Eurobor interest rate setting mechanisms.
Draconian consequences are in prospect. Barnier is moving at the very moment when David Cameron is fighting his rear guard action to “protect” the City from European supervision.
The scandal could not have broken at a worse moment – on the heels of Mr Cameron’s December row at the Brussels Summit, which saw the UK premier walking away from the negotiating table in protest.
In the US we have the scourge of Wall Street abuse, Congressman Barney Frank who inaugurated much of the law which has been jailing miscreants in the financial services industry.
All this tips an even sharper spotlight on today’s events in parliament after their woeful debate on the floor of the House of Commons on Thursday.
MPs on the Treasury Select Committee have a chance this afternoon to do a little to remedy their own disparate efforts to question Barclays’ Bob Diamond. Diamond walked all over them.
This all-party group of MPs displayed a determination not to deploy a coherent team approach to the questioning. Almost no one seemed prepared to follow up on anyone else’s question, each MP having his or her own agenda. Worse, there appeared to be no collective strategy for getting at the truth.
It is hard to imagine that five days will have cohered and strengthened this committee when it comes to question Deputy Bank of England Governor Paul Tucker when he takes the stand this afternoon. The questioning needs to establish whether the Bank did or did not give a ‘nod and a wink’ to fiddling the Libor.
In the meantime Marcus Agius remains both the chairman of Barclays AND the chairman of the British Banking Association which sets the Libor and to whom his own bank told lies.
It’s an Alice in Wonderland situation which can do nothing to reassure either Brussels or Washington that there is any serious will to challenge the old boy antics that got us into this mess. Indeed the presumption that a serving member of the board of Barclays – Sir Michael Rake will simply take over chairmanship of the bank won’t be doing much either. It is hard to imagine that any member of the Barclays board that presided over the ‘culture’ in which all this happened could be acceptable on the heels of so vast and so far un-quantified a scandal.
What must be keeping the City awake at night – beyond the far away markets, must be the awful reality that most of the other big UK banks were involved in it all.
The Canadian courts have followed the Baltimore courts in stating that HSBC and RBS together with Deutsche Bank and JP Morgan have been involved in the scandal as recently as 2010. All the banks are contesting the courts’ claims. But UBS has turned whistleblower and has produced reams of emails and documents.
As I said, this thing just gets bigger.
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