'I'm Not to Blame for Failing to Spot Rate-Rigging' GOVERNOR OF THE BANK OF ENGLAND REJECTS CLAIMS

Western Mail (Cardiff, Wales), July 18, 2012 | Go to article overview
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'I'm Not to Blame for Failing to Spot Rate-Rigging' GOVERNOR OF THE BANK OF ENGLAND REJECTS CLAIMS


Byline: RHODRI EVANS

BANK of England boss Sir Mervyn King told MPs he was not to blame for failing to spot the rate-rigging scandal engulfing the industry amid mounting accusations over the central bank's role.

In a tense Treasury Select Committee hearing, Sir Mervyn denied the Bank put pressure on Barclays to lower its inter-bank lending rate submissions at the height of the financial crisis and rejected suggestions that he ignored warnings over Libor more than four years ago.

In a stinging attack on the Barclays board, the Bank governor said Barclays sailed "close to the wind" too often, but claimed he was unaware of deliberate wrong-doing until weeks ago when the full scale of the Barclays scandal came to light.

MPs on the cross-party committee heard how he felt Barclays was in a "state of denial" over regulatory concerns with the bank following the rate-fixing revelations.

He admitted telling Barclays chairman Marcus Agius that former chief executive Bob Diamond had lost the confidence of regulators - a discussion that prompted Mr Diamond to resign.

There were "genuine and deep" concerns among regulators over governance and a loss of confidence in Barclays' bosses even before the scandal broke, according to Sir Mervyn.

He said there were signs of a worrying "pattern of behaviour" over regulation at Barclays, but that its directors failed to take on board the seriousness of the concerns.

"Barclays was once a great bank. It has to create a new bank with a new culture," he added.

It was not just Barclays that came under fire in yesterday's hearing, as MPs rounded on Sir Mervyn and his deputy Paul Tucker, who was giving evidence to the committee for a second time.

MPs expressed surprise as Sir Mervyn said he was not aware of deliberate rate-rigging until detailed reports were published two weeks ago.

His comments follow news last week that he discussed concerns over Libor - the inter-bank rate at the heart of the scandal - with New York Federal Reserve president Timothy Geithner in 2008, raising questions over why the Bank had not acted sooner to stamp out rate-fixing.

Sir Mervyn said he shared worries with Mr Geithner over the governance of Libor - and had solicited recommendations from the Fed Reserve - but claimed there was no evidence at the time of wrong-doing.

In at times combative questioning, MP John Mann asked Sir Mervyn why he was "still in denial" over whether low-balling of the Libor rate "failed to be spotted".

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'I'm Not to Blame for Failing to Spot Rate-Rigging' GOVERNOR OF THE BANK OF ENGLAND REJECTS CLAIMS
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