In a report, the MPs say Barclays “disgraceful” behaviour damaged the UK’s reputation and that the Bank of England was too slow to react. But are admitting no responsibility for the complete lack of regulation and soft touch approach that was taken towards the banks since the Thatcher era.
In response, Barclays said: “We recognise that change is required.”
The committee’s chairman, Andrew Tyrie, said in a statement: “The committee has called for action in a number of areas, including: higher fines for firms that fail to co-operate with regulators, the need to examine gaps in the criminal law, and a much stronger governance framework at the Bank of England.
“Urgent improvements, both to the way banks are run, and the way they are regulated, is needed if public and market confidence is to be restored.”
The MPs said that the rate-rigging had done “great damage” to the UK’s reputation.
The MPs firmly blamed the bosses of Barclays bank for the way their staff tried to manipulate the Libor rate-setting process at various times between 2005 and 2009.
The overwhelming truth is that the government is as much to blame as the Banking Cartels!
Barclays did not need a nod, a wink or any signal from the Bank of England to lower artificially their Libor submissions”
Select committee report
“Senior management at Barclays were issuing instructions to manipulate artificially the bank’s submissions. It is unlikely that Barclays was the only bank attempting this.”
The MPs’ report makes it clear they did not believe the evidence of the bank’s former chief executive, Bob Diamond, who resigned the day before he explained his role to the MPs.
“Mr Diamond’s evidence, at times highly selective, fell well short of the standard that Parliament expects, particularly from such an experienced and senior witness,” Mr Tyrie added.
The MPs also accused Barclays of trying to pull the wool over their eyes by publishing, before Mr Diamond’s committee appearance, a note of a phone conversation between Mr Diamond and Paul Tucker, the deputy governor of the Bank of England.
Barclays had said this showed the Bank of England had inadvertently given the impression that it would approve attempts by Barclays to submit low and inaccurate Libor submissions, in order to avoid giving the impression that it was having difficulty in raising funds at the height of the financial crisis.
“It remains possible that the information released in the Barclays file note, regarding a dialogue between Mr Tucker and [Mr] Diamond, could have been a smokescreen put up to distract our attention and that of outside commentators from the most serious issues underlying this scandal,” Mr Tyrie said.
“Barclays did not need a nod, a wink or any signal from the Bank of England to lower artificially their Libor submissions. The bank was already well practised in doing this,” the report says.
Responding to the MPs’ report, Barclays said: “We will carefully consider this comprehensive report. While we don’t expect to agree with every finding in it, we recognise that change is required, not least to restore stakeholder trust.
“That is why we have established an independent review of our business practices under Anthony Salz, and we expect that review to take full account of this report in producing its recommendations.”
The MPs accuse both the Bank of England and the FSA of bungling their eventual attempts to make sure that Bob Diamond carried the can for the Libor scandal by eventually resigning from his post at Barclays.
The report says the authorities only appeared to act in response to public pressure, and that the Bank of England’s Governor, Sir Mervyn King, did not in fact have any authority to act as he did and intervene to decide if an individual was suitable to run a UK bank.
“Whatever the merits of the action taken by the governor of the Bank of England and the chairman of the FSA – and this committee has sympathy with the conclusions they had drawn about the leadership of Barclays – the action they took has exposed implicit, and potentially arbitrary, power to force out senior figures in the financial services industry,” the report says.
The Bank of England is accused of being “naive” about the possibility of Libor manipulation during the financial crisis and of being “relatively inactive”.
But the MPs say the failure of the FSA, the main bank regulator, to do its job and properly investigate the market rumours was far worse.
Reform of the way Libor is calculated is currently being reviewed by the managing director of the Financial Services Authority, Martin Wheatley, at the request of the government.
In their report, the MPs said he should recommend changes to the financial services and markets laws to make it easier to prosecute attempts to manipulate Libor or any other similar rates.
Here in the UK and perhaps all over the world there is an overwhelming theme to all this. Regulators are believers in non regulation. Political parties are reliant on donations from the banking cartels. People like Alan Greenspan were saying for decades that “fraud is not possible in the current financial system” Banks are now too big to fail and are systemically dangerous. They have an implicit guarantee of a bailout from the nations in which they reside. They make an efficient market impossible by being so large that competition between them and other smaller companies is being described as “Bringing a gun to a knife fight!”
These institutions must be called to account and downsized enormously!
Things must change!