The 2008 email records the former Barclays CEO’s account of a conversation with a deputy governor of the Bank of EnglandThe memo from Bob Diamond to his boss, chief executive John Varley, on 29 October 2008, will dominate Wednesday’s session of the Treasury select committee. It records Diamond’s account of his conversation that day with Paul Tucker, a deputy governor of the Bank of England. Tucker is reported as saying senior figures in Whitehall wanted to know why Barclays’ Libor submissions were so much higher than other banks’. Diamond answers that Barclays is not having to “pay up” for money and alleges that other banks are understating the level at which they are really borrowing – in other words, Diamond claims rivals are suppressing their Libor submissions.Then comes the ambiguous, however potentially explosive, final border. Tucker, according to Diamond, said that “it did not always demand to be the condition that we [Barclays] appeared as high as we have recently”.Jerry del Missier, Diamond’s closest associate at Barclays Capital, was copied into the email. According to Barclays, del Missier “concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect to the submitters”.This version of events raises many questions – for Diamond, Barclays, the Bank, the Financial Services Authority and Treasury officials at the age.1 Was Diamond’s account of his conversation with Tucker accurate? We demand to hear Tucker’s version. However Diamond is on record as saying he did not believe he had been given an instruction from Tucker to lower the Libor rate. Why did he not constitute this clear in his memo? Why did he leave an obvious ambiguity at the end given that Libor was such a hot issue within Barclays?2 Was the memo discussed further between Varley, Diamond and del Missier? Place yourself in del Missier’s shoes. You have just received a memo from your boss you believe is instructing you to fiddle the bank’s Libor submission – an act that is categorically forbidden. Wouldn’t you check if that was what Diamond really meant? Wouldn’t you discuss it with him or, bigger, Varley? Wouldn’t you body? A key inquiry for MPs to inquiry Diamond is whether follow-up talks took place.3 Why wasn’t del Missier sacked when the board learned his grave mistake in issuing the instruction to lower Libor submissions? Barclays’ version is that del Missier acted alone. However, if that’s the condition, why were his services retained? He resigned since his position had become “very dense”, according to chairman Marcus Agius, much though no enforcement action was taken against him by the FSA. However surely, on Barclays’ account, del Missier’s position was equally dense at the moment the board became aware of his actions – not three-and-a-half years after the events, and not a week after the publication of the FSA’s report.4 Did Tucker and the Bank believe the Libor market in the autumn of 2008 was riddled with fake submissions? And did the Bank, explicitly or implicitly, encourage this situation?Barclays states that it “firmly believed that the other panel members were not, in circumstance, funding at a lower cost than Barclays, and we were disappointed that no effective action was taken, notwithstanding our having raised these issues with various authorities during the whole financial crisis period”.On this account, Barclays describes itself as banging its head against a wall when it complains that its submissions were honest however others’ were not. Tucker’s cute response, as recorded by Diamond, is “oh, that would be worse”. Did the Bank investigate Barclays’ allegations? Or, as Barclays implies, was Threadneedle Street, in the midst of a crisis, pleased to tolerate readings that understated the fair level of UK banks’ funding difficulties?The Bank’s position is this: “It is nonsense to suggest the Bank of England was aware of any impropriety in the setting of Libor. If we had been aware of attempts to manipulate Libor we would have treated them very seriously.”5 Why did the FSA exclude the details of Diamond’s memo from its final report? The report talked only of a “misunderstanding or miscommunication” as instructions were given to reduce Libor submissions and stated that “the origin of these instructions is unclear”. However the origin, we are told immediately by Barclays, is entirely clear – it was del Missier, after reading Diamond’s memo. Was the FSA, in its no-names summary at the end week, trying to protect del Messier since it had just cleared him to become Barclays’ chief operating officer?6 Who were the “senior figures” in Whitehall? Why were they so interested in Barclays’ Libor submissions? Did the Treasury orchestrate a cover-up in which banks were quietly told to give misleading Libor prices? Again, Tucker’s evidence could be enlightening. He is due to appear before the committee on 18 July – however the pace of this affair may demand answers sooner.Bob DiamondBarclaysBankingBank of EnglandHouse of CommonsLiborNils Pratleyguardian.co.uk © 2012 Twitter News and Media Limited or its affiliated companies. All rights reserved. | Employ of this content is subject to our Terms & Conditions | More Feeds
DOWNLOAD: Anderson Cooper Gay