Paul Tucker has finished giving evidence to the Treasury Select Committee.

  • Tucker denies receiving any encouragement from either Jeremy Heywood, Shriti Vadera, Ed Balls or any other government minister to “lean on banks” to lower their Libor rates.
  • Tucker said that alarm bells didn’t go off when he was first alerted that some banks may be low-balling Libor and repeatedly stresses that the Bank of England did not take responsibility for Libor.
  • John Mann filed a Freedom of Information request for emails between the Bank and Barclays.
  • Mann grills Tucker on why these emails between the Bank and Barclays were not released last week before Bob Diamond gave his evidence to the Treasury committee.
  • Tucker said that he wasn’t aware of Libor-fixing until the Barclays scandal and that alarm bells didn’t ring when Bob Diamond said that other banks could be low-balling Libor.

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Tucker: What I’m surprised by is that the compliance people and supervisors didn’t identify this and elevate it upwards. I hadn’t heard a suggestion that this may be wrong and elevated.

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Andy Love: “If it hasn’t been for the persistence of the American authorities this report might never have come out.”

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Andrea Leadsom is concerned that “you have procedures but you seem too busy to follow them” citing writing notes of contact with banks and finds it odd that during an economic crisis and the number of employees working in banking that no one thought to do simple procedures like taking notes of meetings.

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Tucker: “we can’t be confident of anything after learning about this cesspit” 

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John Mann has been spotted tweeting from the committee:

@JohnMannMP: Its worrying that Paul Tucker and others in the Bank of England did not know what was going on

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George Mudie asks when did he first hear that the American authorities and FSA were looking at Libor.

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Writer Dan Conaghan tweets in response to John Mann's question of what politicians should be looking out for in terms of market manipulation:

‏@DanConaghan: The gilts market during QE1 for example.

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John Mann: What else should politicians be looking for in relation to market manipulation other than Libor that may have been going on?

Tucker: There is an issue of pay of more junior people in banks. 

He remarks "It has been too easy to get rick quick"

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John Mann grills Tucker over emails he obtained today using Freedom of Information.

Mann describes it as “criminal fraud” mentioning that academics outside who have seen the minutes clearly identified the activity of low-balling in Libor and voices concerns that Paul Tucker didn't see it coming.

He grills Tucker for not releasing these emails in time for Bob Diamond's evidence.

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The Committee are paying close attention to Paul Tucker’s minutes. Tucker stands by his evidence that alarm bells didn’t ring over Libor.

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Tyrie breathes a sigh of disbelief in inconsistencies in Tucker's evidence.

"This doesn't look good Mr Tucker"

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Tucker: I would’ve had a conversation had I suspected foul play. I didn’t.

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Mark Garnier draws attention to an admission from the BBA that the contributing banks don’t understand how to fix Libor and that there was a lack of clarity on how to define Libor.

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Tyrie criticizes the lack of note-taking of conversations in the BoE describing it as "a bit of a mess".

Tucker: It was a mess. The world financial system fell apart. We had experienced nothing like it.

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Tucker said he was first aware of it when he heard about dollar Libor in the states.

“We would not have dreamt of using Libor as the pricing structure had we had doubts about low or high-balling.”

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Andy Love asks Tucker if he and Diamond had specific discussions about Libor and when was he first made aware of low-balling.

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Tucker: Thought Libor was a reasonable indicator of what was going on

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Here is a copy of the Bob Diamond File Note courtesy of the Guardian:

From: Diamond, Bob: Barclays Capital

 

Sent: 10/30/2008 14:19:54

To: Varley, John: Barclays PLC

Cc: del Missier, Jerry: Barclays Capital (NYK)

Subject: File note: Bank of England call

Fyi

File Note: Call to RED [Diamond] from Paul Tucker, Bank of England

Date: 29th October 2008

Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing. His response was "you have to pay what you have to pay". I asked if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response "oh, that would be worse".

I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing. Equally I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business. This latter point has on occasion pushed us higher than would otherwise appear to be the case. In fact, we are not having to "pay up" for money at all.

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.

RED [Diamond]

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Tucker: “There is great concern that trust has to be restored in banking”

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Bob Diamond in his evidence last week said he felt that Tucker was doing his job by warning him that Whitehall officials were concerned. The “nod and the wink”.

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Teresa Pearce asks Tucker when he first saw the Bob Diamond note.

He says he only saw it around the three inquiries and adds that he has never spoken to Diamond about this note.

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Tucker says he now realises the Libor market was a "cesspit" and says he blames the BBA for not being on top of Libor.

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Tucker says he was not aware of Libor being maniupulated since 2008 and only knew about it in light of the recent Barclays revelations.

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Tucker says that the Bank of England didn't take any responsiblity for Libor, and stresses that the BoE is "not a regulatory body".

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Tucker: In the BBA (British Banking Association) review in 2008, BoE made it clear to the BBA that they would not endorse Libor because they wanted to keep open to possibility of moving to a transactions measure when things had calmed down.

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Andrea Leadsom starts her round of questions and describes Tucker's evidence as "contradictory".

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Tyrie goes back to Tucker's "alarm bells" comment and asks if he already knew that banks were low-balling Libor.

Tucker's response was because the markets had dried up and he was worried that the banks were not borrowing and made the wrong estimates.

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Tucker says that alarm bells didn't go off when Bob Diamond mentioned that some banks may be low-balling Libor.

Sun's Business Editor tweets:

@steve_hawkes: First hiccup for Paul Tucker - if alarm bell didn't go off in his head when Bob Diamond said other banks may be low-balling Libor, why not?

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Tucker: "we were not aware of allegations of dishonesty" in Libor

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Tucker: "This money market isn't working"

Tucker describes the current money market as "sporadic" and "dysfunctional", and that it was a much less sound foundation for determining Libor

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Tucker: HSBC, Abbey National and Santander were seen to be relatively safe. Two banks had been taken under the explicit wing of the government and that left Barclays.

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Pat McFadden asks if Jeremy Heywood ever encouraged him to lean on Barclays to lower their Libor submissions.

Tucker says: "Absolutely not"

Tucker denies that he was ever encouraged by any government minister to lean on banks to lower their libor rates.

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Tucker says the last sentence gives the wrong impression. Tyrie says they'll go back to the File Note and asks Tucker who was meant by Bob Diamond's reference of "senior officials" from Whitehall.

Tucker said that he had contact with Jeremy Heywood on Libor. He adds that he also had contact with Tom Scollop, John Conliffe and Nick McPherson

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Tyrie jumps straight to the Bob Diamond File Note and asks if the File Note is an accurate reflectionof the conversation he had.

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Tucker says that they make records of phone calls if someone is present to take a note of it.

PT says there has been no examination of how the Bank records telephone calls.

He says there is something being done in the context of the Libor scandal.

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Chair of the Treasury Select committee Andrew Tyrie kicks off the session asking why the Bank of England doesn't keep any records or transcripts of conversations.

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Deputy Governor of the Bank of England Paul Tucker is now giving evidence to the Treasury Select Committee.

He is expected to answer questions from the panel about his role in the Barclays Libor scandal where it has been alleged that the BoE had asked Barclays to reduce its Libor submissions.

Attention will be drawn to a File Note sent by Bob Diamond. The memo mentoned a telephone call between himself and Mr Tucker, who raised concerns over Barclays' borrowing costs and that "Senior" figures in Whitehall wanted to know why they were so high.

He is also expected to answer questions on emails published today revealing that he had contacted Barclays several times in October 2008 where he specifically remarked on the high level price of a bond.

The emails can be read here.