Ministers to order Libor bank rate review


David Cameron said he would not be pushed into making a snap decision about whether to order a full inquiry into the banking industry

An independent review of the workings of the Libor inter-bank lending rate has been announced by the government in the wake of the Barclays fine.

Barclays was fined £290m ($450m) for attempting to manipulate the Libor, and other banks are being investigated.

Barclays boss Bob Diamond has been summoned to appear before the Treasury Select Committee on Wednesday.

Labour leader Ed Miliband has called for a public inquiry into the customs and practices of the banking industry.

Earlier this week, the Financial Services Authority and US Department of Justice fined Barclays, and investigations are under way into HSBC, RBS, Citigroup and UBS.

The independent review, which will examine the future operation of Libor - the daily rate set by the British Bankers' Association (BBA) - will be established next week and report by the end of summer.

It will ensure amendments can be made to the Financial Services Bill which is currently going through Parliament. It will also examine whether to target institutions or individuals and whether to launch criminal prosecutions rather than impose fines.

Andrew Tyrie, the select committee chairman, said Mr Diamond's hearing would focus on the Libor scandal, which he described as "the most damaging I can recall".

"The public's trust in banks has been even further eroded. Restoring the reputational damage must begin immediately," Mr Tyrie added.

Barclays' chairman, Marcus Agius, will appear on Thursday.

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Treasury minister Mark Hoban said: "What the public wants to see is a government that's prepared to take action to resolve these problems and get on with it as a matter of urgency."

Ministers are also considering a review into bankers' professional standards.

They have said new regulation is already in the pipeline with measures including the separation of bank investment and retail arms and a new regulatory structure.

During a speech to the left-leaning think tank the Fabian Society, Mr Miliband said the government needed to do more.

"The British people will not tolerate anything less than a full, open and independent inquiry, they will not tolerate the establishment closing ranks and saying we don't need an inquiry.

"They want a light shone into every part of the banking industry - including its dark corners. They want a banking system that works for them.

Driven by a week of public anger at the banking system, the announcement of an independent review is acknowledgement of the need to call those responsible to account.

It's not yet clear who will lead the review of how banks were able to fiddle their own lending rates but it will be independent, and will report before the end of summer, with the possibility of new criminal sanctions either for individuals or institutions.

That falls short of the Leveson-style inquiry demanded by Labour but is an advance on what the chancellor pledged in his initial reaction to the Barclays fine.

While the governor of the Bank of England insists the job in hand should be starting the process of reform rather than costly and lengthy enquiries, it is clear the political agenda is being driven by the public appetite for a day of reckoning for Britain's banking industry.

"They want people held to account, they do not want sticking plaster solutions and I'm afraid at the moment that is all the government is offering."

Mr Miliband also said new powers were required to prosecute people who "do the wrong thing in banking".

"Not one person has gone to jail for what happened during the financial crisis. Why is it that when you shoplift £50-worth of goods you go straight to jail but when you fiddle, lie and cheat your way through the system, gaining millions of pounds, you get away with a slap on the wrist - if that."

The TUC and some Tory backbenchers have also called for a probe similar to the Leveson Inquiry, which is looking into the practices and ethics of the press, but the Treasury and the Bank of England have rejected the idea.

Bank of England Governor Sir Mervyn King said Britain's banks needed a "real change in culture" but ruled out a wider inquiry.

Prime Minister David Cameron said the government would not rush a decision on whether to hold an inquiry and would consider the issues "very carefully".

"It's very important... the government takes all the actions necessary - holding bankers accountable, making sure they pay their taxes, making sure there's proper transparency, making sure the criminal law can go wherever it needs to, to uncover wrongdoing. All of those things need to happen," he said.


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  • rate this

    Comment number 1150.

    Stop it don't you know in Great Britain we only settle for the best:

    - The best Politicians that money can buy
    - The best Bankers that money can buy
    - The best Policemen that money can buy
    - The best Regulators that money can buy

    Anybody notice a pattern?

  • rate this

    Comment number 1149.

    Whilst I think the behaviour of the banks and the greedy bankers is outrageous is it not the kettle calling the pot black when the duck house buying, moat cleaning, living allowance fiddling politicians get all indignant about it. I know not who to trust to sort this out.

  • rate this

    Comment number 1148.

    50% of Tory funding comes from the City Financiers...for some reason they're not "rushing in to an inquiry"

  • rate this

    Comment number 1147. assuming the 64 is your iq ??..the post was meant in a light hearted vane ..which is meant to amuse..and in this day and age with these clowns in charge is much needed..but having said that arent an ex public schoolboy are you !!

  • rate this

    Comment number 1146.

    If Mervyn King rules out a public enquiry let him do as mooted in the media recently and set BoE rate to 0%. For say 18 months to existing loans & mortgages and also direct a minimum tariff of 50% of banks reserves to be distributed through new loans to businesses and home owners for that period at 0% interest.

  • rate this

    Comment number 1145.

    Ahem, you appear too have over looked the crack team brought in by, man of action, George Osbourn - those OBR boys are at the top of their game...

  • rate this

    Comment number 1144.

    1121. POShaughnessy
    Cameron brands Jimmy Carr immoral about tax avoidance schemes which are "not illegal". But not Gary Barlow.
    I bet Gary Barlow doesn't vote Labour. I am surprised Carr does, I always thought he was a closet Tory (I mean, all the symptoms are there...), but I'd be really surprised if Barlow did.

  • rate this

    Comment number 1143.

    So, it seems that David Cameron has decided that a 'review' will suffice.
    This is just prevarication. He's being wildly optimistic if he thinks this kind of sop will quieten down the fury that has erupted. Does he not realize that the disgusting,immoral and couldn't-care-less attitude displayed by Bob Diamond et al will settle down & go away? If he does he's deluding himself.
    He'd better wake up

  • rate this

    Comment number 1142.

    Two thugs on the block...
    The banks and Murdoch inc.

    Both will 'sort ya oot' jimmy' if you look sideways at them!
    Both bullies and cowards...and both display or will display selective memory and any little puissant bully in the playground that they did nuttink' 'onest injun an you can't prove nuttink' '
    Then cry and claim a couple of big kids did it...and they don't know their name

  • rate this

    Comment number 1141.

    Max Kaiser on RT at 20:30 tonight is about to let loose over Barclays and the UK Government. He is definately worth a watch. This guy tells it as it is so watch the Kaiser Report.

  • Comment number 1140.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 1139.

    1037.Sunday Skiver
    "There are so many posters on HYS who claim to speak for a majority, you wonder why they aren't PM yet."

    Because I'm not in the pockets of the bankers. You didn't seriously believe we have a democracy did you? Our politicians have been bought & paid for by big business for little people don't count and cannot compete. Revolutions usually follow that type of system

  • rate this

    Comment number 1138.

    As a small business owner, I am absolutely disgusted by this, it would appear the bigger you are the more corrupt you can be and get away with. So much for the promise of coming into power to clean up "broken Britain" perhaps you should start with this sector Mr C, it seems very broken to me. No one want to open up this can of worms perhaps there would be a little too much egg on certain faces.

  • rate this

    Comment number 1137.

    1111 Suzkid, I think the key word is heard of. I suspect as more comes out we'll find this is an international issue and European banks have their fair share of scandals. It's just the British press ignores it.

  • rate this

    Comment number 1136.

    The coalition do not want to be in power in 2015 when our bills are due they will be wiped out for decades,they need Labour in to take the blame for poor economic governance again,which will get them re-elected again much quicker

  • rate this

    Comment number 1135.

    You call yourself GUARDIAN, guardian of what, stupid comments?

    You are obviously upset about this as I am but please, if you make comments do it to add to the debate or keep quiet.

  • rate this

    Comment number 1134.

    Because bankers measure their self-worth in money, and pay themselves a lot of it, they think they're fine fellows and don't need to explain themselves.

    James Buchan

  • rate this

    Comment number 1133.

    ''It is well that the people of the nation do not understand the banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford.

  • rate this

    Comment number 1132.

    Dear Ministers....we, the people believe you 'are all guilty' of wrong-doing. The Inquiry should be arranged/held prove your innocence. We the people also believe an inquiry won't take place because (back to my first line).

    Stop peeing on our leg and telling us it is raining.

  • Comment number 1131.

    This comment was removed because the moderators found it broke the house rules. Explain.


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