Banking probe row turns political

 

Update 8.14am: There is a key phrase in Barclays Bank's statement explaining Bob Diamond's resignation: "The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen." This will allow Labour to claim that their leader's call for him to resign had some effect.

Update 7.40am: I understand that the Treasury were informed last night about Bob Diamond's plan to resign as chief executive of Barclays. The chancellor has not spoken to him about this or in recent days but did speak to the chairman of Barclays Marcus Agius

Posted 6.59am: The BBC has seen documents which show that ministers in the last Labour government held discussions with banks about policies which would allow the Libor rate - the inter-bank lending rate - to fall.

The documents, which have also been seen by the Daily Mail, do not provide any evidence that politicians knew about, let alone condoned, the manipulation of the rate by bankers at Barclays or at other banks.

The evidence may, however, lead some to suggest that a climate was created in which banks believed they were under pressure from Gordon Brown's government to cut Libor.

They reveal discussions about how the credit guarantee scheme - a government scheme created in 2008 to help get credit to small and medium-sized businesses - would "allow Libor to fall quicker" than it otherwise would.

These discussions were led by Baroness Vadera, a former investment banker who advised Gordon Brown.

Sources in the last Labour government have told me that it was well known at the time that ministers wanted to do everything possible to reduce the cost of credit to help get the economy moving, but have stressed that this was totally different from allegations about the rigging of the market and lying about the Libor rate.

This argument is further evidence of how partisan the debate about banking has now become.

Labour want to portray the government as out of touch with public anger on banking whilst ministers want to present Labour as responsible for the mistakes of the past.

The new parliamentary inquiry into banking - if it is set up - will have the job of investigating the truth.

 
Nick Robinson, Political editor Article written by Nick Robinson Nick Robinson Political editor

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  • rate this
    +1

    Comment number 73.

    Why we need a Judge led enquiry:
    Labour supported the trendy "light touch regulation"
    The Tories believe in "Light touch regulation" as an article of faith and set it all up with the "Big Bang" in the 80's
    Outside Vince the Libs don't have a clue.
    Light Touch regulation is responsible for all of this, asking politicians to sit in judgement is like asking students to mark their own exams!

  • rate this
    0

    Comment number 72.

    The public expect urgent action and the government's proposal for a cross parliament committee offers the quickest results. Its a pity that this has degenerated into a Labour verses Coalition squabble.

  • rate this
    0

    Comment number 71.

    What Labour didn't do:

    "Alastair Darling stepped back today from a radical overhaul of Britain's banks when he ruled out caps on bankers' pay or breaking up the biggest City institutions.

    Pointing to the importance of 1m jobs in financial services and the £250bn of tax generated by the sector in the past nine years, the chancellor rejected demands for major reforms" (The Guardian July 2009)

  • rate this
    +1

    Comment number 70.

    #7 The rank hypocrisy of politicians knows no bounds. Sure Milliband has now a "banker's scalp" but can anyone remember the last time a Labour minister resigned due to mistakes by his department? As far as I can find out this has only happened twice in 60 yrs - last time was Lord Carrington (tory) in 1982.

    As always one law for politicians and another for the rest

  • rate this
    0

    Comment number 69.

    There is a nice moist audit trail that needs to be followed quicky with prosecutions likely and convictions obtained.

    I know little of Mr. Tyrie but he seems a dry enough fellow to follow this through properly. I do suggest that his enquiry is supported by forensic auditors and has a line to a competent police officer: if we have any such left any more.

    Time for unity and purpose! To work!

 

Comments 5 of 73

 

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