Going to hit you again with another Libor tale of woe….It all seems plenty complicated but I have been trying to make some sense of it….so here is my very basic take on it….and a quick summary …Labour is lying, and the BBC, at least in many areas are not doing the homework or are deliberately downplaying Labour’s role in this…with some exceptions.
It is a curious thing but either by design or as a sign of dysfunction the BBC frequently doesn’t seem to draw together all the disparate parts of a story to make a coherent whole….often you hear the ‘expert’ journalist make his analysis but by the time it filters through to the news and other programmes that assessment has changed or been ignored…especially if it doesn’t fit the ‘usual’ BBC narrative…is that down to deliberate decisions by editors or merely lack of care?
After Bob Diamond appeared at the parliamentary committee today the BBC TRUMPETED that he had admitted that he didn’t believe that the message he received was an instruction to manipulate the Libor rate….this of course has been the BBC’s line all day….therefore it was solely down to Diamond that his bank went rogue.
But that is far from the whole truth.
This is all pretty damning of the BBC’s coverage…it is failing entirely to adequately inform us of what really went on. I know nothing about inter bank lending rates and the ins and outs of bank regulation, however just reading a wide selection of information and trying to make sense of it I come to the conclusion perhaps Barclays is not quite so guilty as the BBC and Labour would like us to believe.
In April 2008 the Wall Street journal published this, along with many other articles by others, that said there was huge doubt over the credibility of the Libor rate…ie it was being rigged too low.
April 16, 2008
LIBOR FOG
Bankers Cast Doubt On Key Rate Amid Crisis
LONDON — One of the most important barometers of the world’s financial health could be sending false signals.
In a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London inter-bank offered rate, known as Libor, is becoming unreliable.
The growing suspicions about Libor’s veracity suggest that banks’ troubles could be worse than they’re willing to admit.
Bankers and other market participants have quietly expressed concerns to the British Bankers’ Association, which oversees Libor, about whether banks are reporting rates that reflect their true borrowing costs, according to a person familiar with the matter and to government documents. The BBA is now investigating to identify potential problems, the person says.
Questions about Libor were raised as far back as November, at a Bank of England meeting in which United Kingdom banks, the firms that process bank trades and central bank officials discussed the recent financial turmoil. According to minutes of the meeting, “several group members thought that Libor fixings had been lower than actual traded interbank rates through the period of stress.”
A spokesman for the BBA, John Ewan, said the trade group is monitoring the situation. “We want to ensure that our rates are as accurate as possible, so we are closely watching the rates banks contribute,” Mr. Ewan said. “If it is deemed necessary, we will take action to preserve the reputation and standing in the market of our rates.” Libor is expected to be on the agenda of a bankers’ association board meeting on Wednesday.’
Now today Diamond said he warned Labour about this but they ignored him (presumably because it suited them…a low Libor meant more confidence in the banks):
‘The Barclays executive said that he was concerned in autumn 2008 that the Government may seek to nationalise the bank if they thought Barclays was struggling to raise money.
At the time, Barclays was declaring a Libor rate higher than other banks – which may have been interpreted that it was in financial difficulty. In fact, Mr Diamond believed this was because other banks were manipulating their rates to be lower.
Mr Diamond also added that Barclays had repeatedly warned regulators in Britain and America about the problems with the Libor rate.
“There was an issue out there and it should have been dealt with,” he said. “We were disappointed.” ‘
So it was common knowledge that the banks were manipulating the Libor rate by at least April 2008….Diamond was warning Labour but they ignored him.
In other words it was Labour that was condoning the manipulation of the Libor.
It was Labour and the Bank of England that were questioning why Barclays had a too high Libor rate…which presumably was in fact a more true reflection of Barclay’s position than other bank’s rates.
Why do this? Did they want him to lower that rate…somehow?
Shriti Vadera says it was the government’s job to be ‘concerned’ but the follow on from ‘concerns’ is surely some sort of action to remedy those concerns? What did Labour do…especially as Treasury committee chairman Andrew Tyrie says:
‘The memo reads like it was a ‘nod and wink’ to rig the rate.’
At least one at the BBC believes there is more to this than Labour is letting on:
afneil Andrew Neil To say there was no ‘instruction’ from Tucker to Barclays to lowball libor is Aunt Sally. V clear from Diamond note it was v strong steer.
Oh and look another doubter of the prevailing BBC line:
8.15 BBC Business Editor Robert Peston has been speaking to Radio 4 on the Barclays scandal:
“It’s inconceivable that the Bank of England and Barclays did not have a conversation around how to get Libor rates lower, and that Paul Tucker gave a hint Barclays should be doing this. Banks regard Paul Tucker as a hero for doing this.’
So all in all it seems the Labour story might be unravelling but that there seems some confliction at the BBC on how to report this.
From the Treasury website –
“To be fair, Barclays themselves raise concerns about the LIBOR with the FSA in late 2007 and 2008.”
http://www.hm-treasury.gov.uk/chx_statement_280612.htm
I watched much of Bob Diamond’s evidence this afternoon. The Labour knives were sure out for him – with much of the questioning amounting to a whining attack on bankers per se, ignoring the answers he gave.
My impression of this “ogre” Diamond changed a lot. He is a clever and aggressive banker – and by forming Barclays Capital he took Barclays into the big league internationally in money markets. Barclays was not as stupidly exposed to bad property loans in the UK market as much as other banks and building societies – so in the credit crunch Diamond was able toi raise private capital to shore up the balance sheet, it did not need rescue at huge expense by the taxpayer. Barclays was in a strong enough position to buy the business of Lehman Brothers – a real coup
In sum – whatever his own pay and bonuses, Diamond has earned huge amounts of money for Barclays and Britain. .Taking it from the level of Barclays de Zoete Wedd in a side-street down by the river to full international status.
Yes, a dozen or so rogue traders behaved wrongly – probably illegally – in the LIBOR market. But Diamond had immediately cracked down, had mounted what became a £100 million internal investigation – and had cooperated ve3ry fully with the regulatory authorities in the UK and US. By cooperating so well, the regulators have been able to report on – and fine – Barclays way ahead of all the other major banks that also had rogue trading in LIBOR. Barclays name was being damaged – and Diamond is thereby a fall-guy.
He came across as open and fluent, comparted with some of the weaselly politicians. I guess Labour are squirming to try to avoid any sense of their own follies in messing up the regulatory mechanisms in the City, and in letting a false credit market rush out of control. As Diamond pointed out – the bank collapses in the UK were not among the “casino” investment arms where he built his career and built massively expamded the Barclays share – the collapses were in the “sleepy” retail sector, primarily with UK residential and commercial mortgages.
One of the ignorant Labour harridans was effectively accusing Diamond of complicity in the illegal activity. Anything to deflect blame from the years of Labour mismanagement of City regulation.
I am rather puzzled by the whole thing. It does not hang together at all. Banks have money, banks lend money not only to business and individuals but also between banks. And this latter is what the LIBOR relates to, and only that.. It refers to the London Interbank Offered Rate, note the “offered rate”. 16 to20 banks are on the Panel for each currency and they take a mean of the 50% of middle values to report each day at 11.00am. as the rate is that offered it is difficult to see how rigging it could be so easy, apart from the normal report it is given to the FSA and presumably the BoE. Why, therefore, pick on Barclays in isolation, they did not after all need bailing out as did the Scots Banks. Or what is Cameron trying to hide that we really do not want to happen?
As Diamond pointed out – the bank collapses in the UK were not among the “casino” investment arms where he built his career and built massively expamded the Barclays share – the collapses were in the “sleepy” retail sector, primarily with UK residential and commercial mortgages.
Funny how this is the exact opposite of what Robert Peston has been pushing for the last two plus years. To hear it from the legendary BBC business editor, it was all down to the recklessness of casino banking. It’s also curious how Peston has had it out for Diamond for a while now. I wonder whether or not Peston and his far-reaching network of gossip and influence contacts had anything to do with the current persecution of Diamond.
Now THIS is a public enquiry that needs the right person running it – Brown Balls, King and the rest in the dock and hopefully facing charges, much too good to be true!
‘there seems some confliction at the BBC’
And elsewhere in the MSM, rather typically sensing ratings with a few adding tribal biases in complement.
So one needs to be alert in navigating views purporting to be ‘analysis’.
SKY’s newspaper review just now was a classic set-up: some British Bulldog grumpy old man and a pretty young blonde ‘journalist’ (odd how those selected to be featured on screen seem to be easy on the eye, even if their brains can often appear wired in a certain direction). This peroxide sink suddenly trotted out a line that seems almost identical between Labour, the BBC and the Graun in favour of the latter’s inquiry option, namely in front of all the judges they appointed. She also claimed that while all this was indeed under Labour’s watch (or influence), the current government was funded by the CIty, which was much more dodgy.
I am actually open to weighing the arguments. However, the entire media monopoly that is the BBC and its fellow travelers and their policy-skewing twitter power tends to make me resist such overt influence as well, especially given the aim seems less and less spotlight in a certian direction and, for once, an asbestos cloth lobbed over any parrot squawking about their favoured pols’ evident neck-deep complicity.
Cameron to Clegg to Miliband, Balls to Osbourne… I wouldn’t trust any of them with a whelk stall. However, having sold their souls to the power of a minority to influence the majority, I’d trust the media, and especially the BBC, even less.
As with any wrong-doing, I simply seek the truth, the guilty to be identified, punished properly, and systems in place to prevent repetitions of any holes that can be re-exploited. Prevention is better than revenge.
So I remain of an open mind. But having endured Leveson, I fail to appreciate such an inquiry to be the universal panacea touted by the luvvy classes, and given its appeal to many amongst them am inherently suspicious as to why.
However the alternative does also seem flawed too.
What interests me is how this will be decided, and by whom, using what methods.
I make no further comment, but simply now share, in reverse order, the last three posts from the impartial political editor of the BBC, who in no way favours Labour, dislikes the Coalition, and has a definitive preference on how best this issue gets investigated:
17 hours ago
@bbcnickrobinson via Twitter
Tory committee terriers – Ruffley and Fallon – have left hearing together. They plotting? Hope they reading twitter! Still time ….
6 hours ago
@bbcnickrobinson via Twitter
John Mann riding to rescue of parliamentary inquiry with tough questioning of Bob D. Will the Eds be pleased?
Not much of a show
89
It was meant to be Bob Diamond in the dock but the MPs cross-examining him were also on trial.
The prime minister insists that a committee like today’s and chaired by the same man will do a better job than a public inquiry chaired by a judge.
It has been obvious from the start that Barclays alone could not drag LIBOR down – a quick look at how the index works starting at Wikipedia shows this clearly. It is an average of figures given by up to 15 banks, with the lower and upper quartiles dropped from the calculation. A single bank could only affect a minor influence on the final figure, and if they gave a too low figure it would not be used at all. By inference, ALL the banks had a say and were clearly colluding between each other to effect this result. And of course, if LIBOR went down the man in the street would overall be better off.
Yet again we have seen ‘trial by media’ (which I last witnessed when our MP Andrew McKay way forced out effectively by a mob of journalists). Diamond will find a new role elsewhere (but I guess not in politics!).
Interesting that it seems to have been dropped as the lead story this morning. Maybe the BBC has been told to ‘calm it’?…
The only clear points I got from yesterday’s hearing was that Barclays reported accurately what their costs of borrowing were – whereas a lot of other banks were reporting lower LIBOR figures based on wishful thinking rather than what they were being required to pay for money – and some of those banks, in the crunch, were not able to borrow anything anyway from anyone.
Further – Barclays had been telling the FSA for some time that there was under-reporting -0 FALSE reporting – of LIBOR. The FSA failed to act., so Barclays continued to be out-of-line, and when banks were going belly-up Diamond and Barclays were concerned that “Whitehall officials” might get the false idea that banks were wary of lending to Barclays. Diamond did not want any unnecessary “rescue” intervention by Labour politicians when he was on the point of raising fresh equity without going to the taxpayer.
I got those points by listening to the evidenced. Yet those points were not made clear in subsequent BBC reports on the proceedings.
…………….
Adair Turner at the FSA appears to be one of those who called for Diamond to fall on his sword. Seems to me that the FSA fell down on the job much more – it should be Turner who goes. And Turner has helped drag the name of Barclays through the mud when there are ongoing investigations into virtually every international bank – Barclays has been fined first, because under Diamond’s regime Barclays was most up-front in trying to help the investigations reach conclusions. Regulators in the US as well as the UK .reported favourably on Barclay’s cooperative approach to the investigations. Where is the BBC witchhunt against the bosses of all the other big international banks ?
Time and time again the BBC fails to address the core problem – the disarray in regulation of the City caused by Brown’s policies. Just like it fails to report that the international financial collapse was rooted in the US sub-prime mortgages policies pushed by Democrat politicians, abetted by local rabble-rousing lawyers like Obama.
There seem to be two of us. Perhaps one of us should add Dave S (2) . Not that I find fault with your comment but it wasn’t me. .
Oh, sorry…. That is the problem with replying without registering an account which would have alerted me to the fact. I was a bit reluctant to give my full name in a forum I had never contributed to before. Will Dave Sgt do?…
Fascinating disussion, I have seen the faults in the BBC in this matter from the start, and the politicians seem to know not much more either.
Dave Sgt is fine.
Wecome Dave Sgt !
LIBOR – Liebore : thought for some time bBC was in some alternative universe, talking about Liebore. Should have known better.
This was the time when Gordon Brown, was supposed to be saving the banking system from collapse, (the credit crunch started in America I’ll have you know). He was daily telling us he was all over this. He will now, no doubt say, he had no idea this was going on, and it was done behind his back .
It was fascinating watching the round up of yesterday’s hearing on last night’s new bulletins and that only one broadcaster failed to mention, that when pressed on the matter, Diamond disclosed that the ‘high ups’ that were concerned about Barclay’s Libor submission, were (Labour) Government Ministers. Can any of you guess which broadcaster forgot to mention this? You may want to go away and make a cup of tea while you ponder !!!
ITV’s Tom Bradby, who’s insight, integrity and balance must make him one of the country’s leading political journalists, said that this information was a ‘significant development’. So why was it that the BBC ignored this? A simple omission? or wilful myopia?
Congratulations, by the way, Alan on the excellent bit of digging, and summary, above – if only our broadcast journalists could put their backs in to this in the same way, the British people would be much better informed. Your piece actually goes some way to explaining why Lord Myners, let out an embarrassed laugh on NN last week, when asked if he knew anything about the Libor allegations. If you believe his denial, he was either a Government Minister who didn’t know what was going on in Government (or the City for that matter), or he didn’t read the newspapers.
It carried onto Today as well this morning.
Nick Robinson clearly wants a judge led enquiry…but “unfortunately”(his very word) the Tories will win….despite Labour “persuading all the other parties apart from the LibDems” to vote for a Hutton to bring his whitewash brush for Balls and Company.
Robinson reckoned that the Diamond interview yesterday was a show of how wrong the Tories are(despite MPs being fit to interview Murdoch last year as I recall)…he equated it to Evan Davis having thirteen agendas around him in the editors suite of “Today” by way of analogy.
These couple of minutes tell you much about the BBCs self-regard…
1) The Today Show is a template to put the likes of Diamond in the dock-whereas our elected MPs in the highest court in the land( in theory only) are hopeless.
2) A judge-led enquiry a la Hutton or Leveson will let Labour off the hook(who else appointed these toady lefties in the “Supremes Court”…an MP led one might skewer Labours liars and shakedown monkeys from 1997-2010 who allowed this fixing of interest rates ;whilst they were supposed to be in charge.
Too democratic old boy-can`t allow Brown and Blair, McBride and Campbell, Mandelson and Vadera, Balls and Blanchflower back to account for their incompetent malevolence….not at all old boy!
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