Tucker: I did not tell Barclays to rig rate

PAUL Tucker, the deputy governor of the Bank of England, yesterday denied claims that members of the Labour government pressured him to encourage Barclays to lower its Libor interest rate submissions in 2008.

“Absolutely not,” he said when asked to say whether government officials had asked him to “lean on Barclays” at the height of the financial crisis, a development that will be acutely embarrassing to chancellor George Osborne, who had implied otherwise.

Giving evidence to the Treasury select committee, Tucker also called for the government’s inquiry into the administration of the Libor rate system to be extended into other self-certified indices.

“Even if these other markets have been completely clean – and we have no information on that one way or the other – self-certification is plainly open to abuse and could occur elsewhere.”

Asked to confirm Libor rate submissions were now cleaned up Tucker replied: “I can’t be confident of anything after learning about this cesspit.”

But Tucker backed up the view of Bob Diamond, the former Barclays chief executive, that the bank had been “next in line” for a government bailout at the height of the financial crisis and that the Bank of England’s main concern was that the firm might go bust.

Tucker had been considered the favourite to succeed Sir Mervyn King as governor of the Bank of England but his reputation has been battered after he was dragged into the Libor scandal.

In a memo released by Barclays last week he was reported to have told Diamond that “senior Whitehall figures” were concerned about the bank’s high Libor submissions.

In response Tucker requested an opportunity to explain his side of the story to the committee. He said the memo “gave the wrong impression” but that he did not have his own record of the conversation.

“These were completely extraordinary times and we were making an enormous number of calls,” he said. “Sitting here, I greatly wish I had taken a note of it.”

Emails released yesterday show Jeremy Heywood, then Gordon Brown’s chief of staff, was communicating with Barclays and Bank of England officials about the bank’s Libor submissions in October 2008.

MPs also raised questions about a November 2007 Bank of England meeting, chaired by Tucker, where concerns were raised about unusual patterns in Libor submissions. “We were not aware of allegations of dishonesty. I think that what was being said we understood to mean ‘these money markets are not working, they are dysfunctional’,” Tucker claimed.

“This does not look good, Mr. Tucker,” replied committee chairman Andrew Tyrie.

Labour officials last night claimed that Tucker’s evidence exonerated them following last week’s brutal House of Commons debate between Osborne and Ed Balls. “The chancellor must have known all this but still made false allegations in the hope of narrow political advantage and to divert attention from his refusal to hold a proper independent inquiry,” said Labour MP Chris Leslie.