The Libor scandal gets a bit wider. It’s in all the papers, and my earlier take on it is here: http://mikekr.blogspot.com/2012/06/big-financial-stories-today.html
Now, according the BusinessInsider
…[Barclays] says that its CEO Bob Diamond had a conversation with BoE deputy governor Paul Tucker, wherein Tucker inquired why Barclays was submitting rates so high compared to other banks. This conversation was relayed to one of Diamond's lieutenants Jerry del Missier, who apparently concluded that Barclays was being pressured by the BoE to lower their number.
There are two big implications that are interesting: One is the obvious accusation that the BoE pressured Barclay's to lower its stated borrowing rate. The other is the implication that EVERY other bank was doing the same thing, since the gist of the call between Diamond and Tucker was that Barclays needed to get into line with the other banks.
Read more: http://www.businessinsider.com/barclays-letter-on-bank-of-england-2012-7#ixzz1zcXp8Cj9
I’m not so sure that second statement follows. If Barclays was the outlier, maybe that was the curious thing and there’s no necessary implication from this that everybody else was manipulating. But BusinessInsider has more time and inclination to dig up the facts than I do, so perhaps they are right. Clearly, the WSJ article in 2008 that first shocked me about the Libor issue implied that there were lots of banks doing the manipulation, so maybe that’s what BusinessInsider is channeling.
This whole defense, though, seems a bit silly. Banks resist attempts by governments to make them do various things all the time. They have large lobbying efforts, and make large campaign contributions, so that they get to do what’s in the bank’s interest rather than what the government feels is in the public interest. (Whether the government actually knows what’s in the public interest is another topic.)
So, the notion that they were just bowing to a conversational whim of the Bank of England just because they are the Bank of England seems silly.
Post a Comment