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Paul Tucker defends conversation with Diamond

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Bank of England deputy governor Paul Tucker has rejected the idea that a conversation he had with ex-Barclays chief executive Bob Diamond could have been taken as an instruction to lower its Libor rates.

Last week, the Bank of England was dragged into the Libor scandal when Barclays released a memo claiming Tucker had told Diamond in 2008 that a number of “senior Whitehall officials” had expressed concerns over the Libor numbers being reported by Barclays.

The memo was sent by Diamond to John Varley, who was chief executive at the time, and Barclays chief operating officer Jerry del Missier, who resigned last week in the wake of the £290m fine handed down to Barclays for rigging the Libor and Euribor rates.

Giving evidence to the Treasury select committee this afternoon, Tucker was asked by TSC chair Andrew Tyrie whether he would “categorically refute” the suggestion the conversation could have suggested he was inviting Barclays to lower its submission.

He said: “Absolutely…….. [To reflect what I said to Diamond, his memo should have said] something along the lines of are you ensuring that you as senior management of Barclays are following the day to day operations of your money market desk and your treasury? Are you ensuring that they do not march you over a cliff inadvertently by giving signals that you need to pay up for funds?”

Diamond’s memo said: “Mr Tucker stated the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”

Tucker said he wished he had taken a proper note of the conversation but had not because of the pressure at the time due to the unfolding financial crisis.

Diamond told MPs last week that he did not take the conversation to be an instruction and that he was unaware that when he sent a memo detailing the alleged communication with the BoE to other senior staff it was taken by them as an instruction.

Last week Diamond said he took “senior Whitehall officials” to mean ministers but did not give any names.

Today, emails released by the Bank of England show Tucker and Jeremy Heywood, then chief of staff at Downing Street, discussed Libor on a number of occasions in October 2008. Tucker told MPs he also spoke to Tom Scholar and Nick McPherson at the Treasury and John Cunliffe at the Cabinet Office.

The Bank emails do not suggest he put pressure on Diamond to lower Barclays submissions.

Diamond told the committee last week he thought Tucker’s alleged comments indicated concern Barclays may be having trouble raising funding and could need state assistance.

Alistair Darling, who was Chancellor at the time, and Ed Balls, who was Education Secretary at the time, but was close to the then Prime Minister Gordon Brown, have both denied they had anything to do with the calls to the Bank of England.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Tucker said he wished he had taken a proper note of the conversation but had not because of the pressure at the time due to the unfolding financial crisis.

    Tell that to the FSA all you IFAs!!
    See if they believe you.
    Amazing what these people think they can get away with ,selective memory loss.
    This is potentially the next Head of the Bank of England.
    He doesn’t get my vote!!

  2. Dominic Thomas 9th July 2012 at 5:43 pm

    I wonder if we will ever know the truth on this. Its a little laughable that notes are not kept about such high-level conversations, does this suggest that the Old Lady of Threadneedle Street is behind the times, or just flustered? Even the flipping call centres record conversations. Advisers will be aware that no evidence (research, due diligence, advice) is taken to mean, nothing to support your case. So prepare to face the fire.

    What is particularly disappointing is that CEOs like Mr Diamond are paid enormous sums to take responsibility, yet pass the buck at the earliest opportunity, whilst still wanting to cash in. Is it any wonder why so many people loathe this lot.

    Anyway, I thought financial services in Britain was meant to operate within the law, not at the whimpers of Politicians.

  3. Larry in London 9th July 2012 at 5:54 pm

    The real question is not about the BOE but whether the FSA knew what was going on. The City is pretty incestuous so it’s practically certain that they did.

    So far the FSA has not had a skin more slippery than Teflon®, but eventually some of this mud will stick. If only people could have the presence of mind to throw it in the right direction…

    Love and kisses

    Larry

  4. Roger Chadbourne 9th July 2012 at 6:30 pm

    Concur absolutely.

    Whatever happened to, “If it ain’t written down, it didn’t happen?”

    That’s it, I’ve had enough, I’m out of here. Retirement has finally rolled on, and this is my last posting. This domain name gets cancelled today and I have changed my email address.

    I am leaving because the Regulator, who never sits in front of, let alone smells a client, has decided that my 25 years experience, professionalism and expertise are worthless and render me incapable of performing the services to clients and their families that have made a positive difference to their lives. I am leaving because the structure on which I have based my business and professional career has been recently shown to be corrupt from the top downwards, and the very people in these autonomous and unaccountable organisations who should be my champions and strongest supporters are inept, incompetent and for the most part ignorant. They appear to be totally incapable of enforcing any sort of control or check against the worst unethical and irresponsible actions of the larger institutions thereby endorsing the client detriment thus created. They have promoted an incestuous and nepotistic relationship with those organisations, with senior directors and management swapping jobs between the regulator and the regulated without regard for worth, value or accountability.

    And they are grossly overpaid with my money.

    I am leaving because these same organisations, who I have supported with my fees and contributions, seem determined to undermine and collapse the whole structure of a service industry that is the envy of many developed nations, and reduce it to a common European standard where, if you need financial advice, you have to go to the Bank.

    And God help you if you do.

    I shall miss none of this.

    What I shall miss is working with the many and varied group of people who have afforded me the privilege of me being able to call them “My Clients.”

    I wish you and all in the Financial Services Industry every success and good fortune for the future.

    Goodbye, and thanks for all the fish.

  5. Has it not occurred to you that Hector Sants wants to be the next Governor of the Bank of England? All the dots join up now!

    Have a GREAT day!

  6. 6.30pm – Roger Chadbourne
    Best wishes for a long & happy retirement!!

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