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 190.

    Banking fraud, tax evasion, phone tapping, what next? Its just one greedy, immoral and illegal practice after another and all at the highest level. Maybe that's what they really teach at public school.

    Fortunately for them, each revelation seems to bury the news of the preceding scandal and we are already past the point where we are shocked by them.

  • rate this

    Comment number 189.

    142 geordie

    " the decision by Labour to deregulate the banks and allow them to regulate themselves."

    Learn some political history that decision was taken and forced through by Thatcher.

    And Tories have resisted regulation ever since!
    They stalled legislation in the Commons and Lords when Labour tried to beef regulation up...this is a Tory screw up...through and through!
    Your projection noted!

  • rate this

    Comment number 188.

    Bring it one

    We also need to look at ombusman what a joke a law to themselves

    Ombudsman does not even have Follow rule of law and can make it up

  • rate this

    Comment number 187.

    Frogspawner 138 - You are spot on , grab bankers assets, prison and a real shake up, we need to put in place a transparency and integrity. What Barclays and tuthers have done is to bring shame on our Nation and the sort of integrity we associate with the third world!
    Talk about trust, who can we trust? I moved from RBS to Barclays! Frying pan to fire I guess

  • rate this

    Comment number 186.

    Remember who was responsible for allowing this crooked culture to become endemic in the City? It was Baroness Thatcher who created the conditions for this lawlessness to flourish & it was further encouraged by Mr Brown's "light touch" regulation stupidity. I'm sure he cringes each time he's quoted on this. Yes, sort the mess out, give mandatory jail sentences, not ruddy honours, they're crooks.

  • rate this

    Comment number 185.

    We don't need an inquiry in the style of Leveson (a complete waste of time). We need Police action the facts are known.

  • rate this

    Comment number 184.

    Milliband has two objectives .

    1 look like he is leading the debate
    2 imply the Tories are protecting their mates
    3 pretend his pals were not responsible .

    His mates at the BBC have done him proud with this article .

    these. Revelations have come from an existing enquiry .
    The government have already put in motion huge changes to the banking system .

    Milliband its your fault . Go away

  • rate this

    Comment number 183.

    The need for an inquiry implies you don’t understand what has happened.
    Probably true for most politicians
    The regulators should be very aware of ‘what’ was being done.
    They should investigate to find ‘who’ is responsible and take appropriate action (Recovering their cost from the industry not the exchequer)
    If their remit is insufficient it makes you wonder what they are there for.

  • rate this

    Comment number 182.

    Public fed up with 'out of touch' politicians like Ed Milliband calling for long & costly enquiries.
    Just prosecute the wrongdoers for gaining pecuniary advantage under existing Theft Act.
    Could we please have politicians who don't remind us of 'Wallace & Grommit' characters, and have actually done real jobs before becoming politicians?

  • rate this

    Comment number 181.

    Talk about stable doors and horses!! Labour had 13 years to sort the banks out and did nothing - why? Because they were too busy taking huge amounts of tax from the bank profits and bonuses to pay for votes, via tax credits, increased welfare payments and huge building programmes in their own constituencies. Both milliband and balls are trying to deflect responsibility - as always.

  • rate this

    Comment number 180.

    Anyone trying to blame this on any particular political party might do well to remember that, whilst it was Blair who did a lot to screw up our finances, it was Thatcher who de-regulated the banks and therefore opened the door to this happening.

    Politically, no-one has clean hands in this.

  • rate this

    Comment number 179.

    For some reason I don't believe anything David Cameron has to say on this.

  • rate this

    Comment number 178.

    I suspect that any enquiry that illuminates who is in bed with who; who's snouts have been guzzling from the same trough, will be staedfastly avoided...

  • rate this

    Comment number 177.

    I seriously suspect that these BBC HYS sites are really government monitoring gadgets. Opportunity for us to rant & rave while the regime gets the whif of public opinion

    A sort of measure of middle England, & Wales in my case. All part of the public broadcasting ethos, etc

    What does everyone else think?

    Am I being too cynical? Answers with an SAE please. Crackerjack pencil for winner?

  • rate this

    Comment number 176.

    The accummulation of mass wealth has to stop - it has to be seen as not only immoral by politicians and society but as dysfunctional to the economy. Hoarding money stops money working. Those who hoard have a problem and are addicted. They create the social and economic ills of society with their cravings.

  • rate this

    Comment number 175.

    What is really needed for financial institutions is an independent regulatory body with teeth! The doctors have the G.M.C. with the power to impose sanctions that go to the point of striking serious misconduct & incompetence offenders off the register so they can't practice & exactly the same is required for the banks & other financial institutions because self regulation does not work for them!

  • rate this

    Comment number 174.

    And if you ever wondered if de-regulation works well here is your answer.

    Its like putting an arsonist in charge of the fire brigade.

    I still hear those cries of "Let the Market do it"

    Well "The market did it" and did it to us all.

    How long will it take for people to finally realise that where there is possibility for greed to breed there will always be people who will take advantage of that.

  • rate this

    Comment number 173.

    Maggie started this. Labor should hae stopped it. The only reason this lot will change it, is that they got caught!

  • rate this

    Comment number 172.

    "I'm not so sure all in the Labour party will be so keen on an inquiry?"

    Maybe because whatever happened during their time in power Osborne, despite claiming he would pre election and despite public support to do so, has done nothing meaningful to reign in the banks so clearly agreeing with Labour's course of action.

    Maybe we would also find out what influence Fink has on Tory party policy.

  • rate this

    Comment number 171.

    Why are you SO reluctant to have an enquiry into an industry that... etc

    Because it will solve nothing

    These "inquiries" are political whitewashing shows for the media to spoon feed a gullible public

    We need a new system before our hooky corrupt politicians break Britain completely

    Direct Democracy


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