Bank of England Implicated in Libor Fixing: BBC Panorama

The Bank of England was influencing the major banks setting Libor Libor Libor stands for London Inter-bank offered rate. It is an industry-specific term which most of us would never have heard of until the "Libor scandal" became popularized in 2012. Libor is considered to be one of the most important interest rates in finance, upon which trillions of financial contracts rest. The Libor rate effects over $800,000,000,000,000 in financial deals. Banks simply cannot lend money to one another whenever they like as there is a system in place. Every day a group of leading Libor stands for London Inter-bank offered rate. It is an industry-specific term which most of us would never have heard of until the "Libor scandal" became popularized in 2012. Libor is considered to be one of the most important interest rates in finance, upon which trillions of financial contracts rest. The Libor rate effects over $800,000,000,000,000 in financial deals. Banks simply cannot lend money to one another whenever they like as there is a system in place. Every day a group of leading Read this Term rates during the great financial crisis, a recording unveiled by BBC Panorama shows. The British media uncovered that commercial banks were put under pressure by the central bank to push the figures lower in the midst of the great contemporary conundrum for global financial markets in 2008.

The recording potentially calls into question the parliamentary testimonies of former Deputy Governor of the Bank of England Paul Tucker and former CEO of Barclays Bob Diamond.

Libor rates are the basis by which commercial banks calculate interest rates on a variety of products including mortgages and other loans. The Bank of England has stated that Libor rates were not regulated at the time.

Banks have to submit the rate at which they can obtain financing from other banks. According to a conversation in the recording held between senior Barclays manager Mark Dearlove and Libor rates submitter Peter Johnson, the bank was pressured to report lower Libor rates by the UK Government and the Bank of England.

After Johnson objects to reporting figures that are lower than the market rates, he is told by his supervisor to report the figures lower anyway.

The call between the two occurred on the same day that Paul Tucker spoke with the then-CEO of Barclays, Bob Diamond. The BBC states that the duo discussed Libor rates during the call.

Commeting to the BBC, MP Chris Philp said: “It sounds to me like those people giving evidence, particularly Bob Diamond and Paul Tucker were misleading parliament, that is a contempt of parliament, it's a very serious matter and I think we need to urgently summon those individuals back before parliament to explain why it is they appear to have misled MPs. It's extremely serious.”

Mr Diamond denies misleading the government, while Paul Tucker declined to comment on the matter to BBC Panorama.

“The Bank of England has been assisting the Serious Fraud Office’s (SFO) criminal investigations into Libor manipulation by employees at commercial banks and brokers by providing, on a voluntary basis, documents and records requested by the SFO,” the central bank of the UK said in a statement to the BBC.