The BBC has been reporting all day that a recording of a phone call has implicated the Bank of England in the Libor rigging scandal…..this is what was said on the phone in 2008…
“The bottom line is you’re going to absolutely hate this … but we’ve had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower.”
How is it that the BBC misses out that bit about the Labour ‘UK government’ when asking who was rigging the rate…Gordon Brown of course having been Chancellor before taking over as PM?
i’m not convinced in my own mind that this is the big story that we are led to believe is it?
As the banker of last resort, and the country’s Central Bank, I would have thought that it is critical for the BoE to guage the economic environment of the country and to facilitate borrowing at the appropriate rates?
Of course, its different for the retail banks, but the Central Bank operates at a different level.
The point that the BBC fails to indicate that Labour were the governing party at the time is entirely accurate, and probably to be expected.
As the lender of last resort it is the Bank of England’s job to sort out banks that fail. It isn’t the job of the Bank of England, the Treasury or the government to coerce banks into misreporting LIBOR, which would essentially be a fraud on some of their customers. Daily LIBOR rates are used to fix the rates on loans and deposits. If a bank deliberately misreports its LIBOR rate then it is reducing te amount that borrowers have to pay and the amount that depositors receive.
Manipulating libor is surely a criminal offence no matter who put pressure on .
This cannot be true Gordon Brown is such an honest, upstanding , decent, moral, respectable, virtuous, kind, nice, friendly, pleasant, gracious, ……. bastard.
Gordon Brown made the Bank of England independent back in the late 1990s so it would be interesting to get Mervyn King’s take on whether the Bank did pressurise commercial banks over libor and whether in turn politicians were pressurising the Bank. The other point Is that while rigging libor would gave been wrong given its pivotal role ( its now illegal though the law wasn’t clear in 2008), there was one almighty financial implosion going on at the time which could have , but didn’t herald a rerun of the 1930s Great Depression. No doubt there was a lot if panic in high places at the time!
This is very good news – because as we know, the guilty in this case have ended up with jail sentences. Let’s hope the police follow every lead diligently!