Tory MP urges Osborne to apologise to Balls over Libor

 

A Conservative MP has urged Chancellor George Osborne to apologise to rival Ed Balls for saying he had “questions to answer” over the Barclays rate-fixing scandal.

Andrea Leadsom made the plea after the deputy governor of the Bank of England “absolutely” rejected suggestions he had leant on the bank to manipulate the Libor or that Labour ministers had encouraged him to do so.

Ms Leadsom, who sits on the Treasury Select Committee, said fellow Tory Mr Osborne had made a mistake last week by claiming that figures in Gordon Brown's inner circle were involved in pressurising Barclays into altering the key lending rate.

The MP told BBC Radio 4's World Tonight programme: “Obviously he made a mistake and I think he should apologise.

“I think it was a very valid discussion at the time about who knew what and it has now been completely squashed by Paul Tucker.”

Mr Tucker, who is a frontrunner for the role of Governor when Sir Mervyn King steps down, yesterday told MPs a record of a contentious phonecall he had with former Barclays boss Bob Diamond about Libor gave the “wrong impression”

Appearing in front of the Treasury Select Committee, the senior banker said he had intended to ensure Barclays was not “inadvertently sending distress signals” about its financial health at a time when the market viewed the bank as the next in line for a government bailout.

The deputy governor rejected claims that the then Downing Street chief of staff Sir Jeremy Heywood, then City minister Ed Balls and former Treasury minister Baroness Vadera had asked him to pressure Barclays to lower its Libor submissions.

Labour seized on his comments as proof that Mr Osborne was wrong to make the claims, which first surfaced in the media before being repeated in the House of Commons, and demanded a public apology.

Labour Treasury spokesman Chris Leslie said: “This is now the final nail in the coffin of the Tory smear campaign the Chancellor led last week. It is now crystal clear that the allegations he threw around were completely wrong and without foundation.”

Barclays chairman Marcus Agius will today face the parliamentary committee and is expected to be asked about fines issued against the bank and the resignation of Mr Diamond, who stepped down last week in the wake of the scandal.

Pressure is continuing to build on the former chief executive to waive at least part of a reported £17 million golden parachute deal.

Mr Agius has also announced his intention to step down but will remain until Mr Diamond's successor is found.

Barclays has been the focal point for a row over banking culture after the bank was fined £290 million by UK and US regulators for manipulating the Libor, which affects mortgages and loans.

Mr Tucker found himself in the spotlight after Mr Diamond published his account of a phonecall, in which it has been suggested Mr Tucker was encouraging the bank to submit lower Libor submissions in light of concerns from senior Whitehall figures.

Mr Tucker said that concerns about Barclays' submissions existed at the time he spoke to Mr Diamond in October 2008 not only in Whitehall but also in the markets.

After the launch of a package of co-ordinated international efforts to shore up the markets earlier in the month, both officials and markets were monitoring Libor and found that - compared to many other participants which had lowered their submissions - “Barclays continued to pay higher rates in the market, as reflected in their Libor submissions”.

The deputy governor said there was concern that Barclays was “next in line” to collapse and require taxpayer assistance after Royal Bank of Scotland and Lloyds Banking Group.

Mr Tucker said he contacted Mr Diamond to discuss its high Libor submissions because the economic climate was “fragile” and banks needed to be careful.

During his evidence he also described the setting of the Libor rate as “a cesspit” and called for an end to the practice of “self-certification” under which banks submit figures on the basis of their own judgments rather than actual transactions.

PA

Independent Comment
blog comments powered by Disqus
Top stories
News in pictures
World news in pictures
UK news in pictures
UK news in pictures
More stories
       
Independent
Travel Shop
India and Shimla
14 nights from only £1899pp Find out more
Prague city break
Three nights from £199pp Find out more
4* Soreda hotel break, Malta
Seven nights all-inclusive from £399pp Find out more
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Watch out Watford: Here comes the secretive Bilderberg Group

Watch out Watford: Here comes the secretive Bilderberg Group

A meeting of global power brokers in a Hertfordshire hotel is exciting conspiracy theorists, but what are they really about?
'The ultimate all-in-one home entertainment system': Microsoft finally unveils its Xbox ONE console

'The ultimate all-in-one home entertainment system'

Microsoft finally unveils its Xbox ONE console
Plenty of Fish dating site founder pulls 'Intimate Encounters' option to ward off sleazy men

Plenty of sleaze

Dating website pulls intimate 'hook-up' section to curb harassment
Inferno author Dan Brown 'honoured' to be invited to join the Freemasons

The Freemasons’ Code

Dan Brown reveals the message that told him door to the lodge is open
Not secure any more: G4S boss heads for exit at last

Not secure any more: G4S boss heads for exit at last

Nick Buckles survived the Olympics débâcle and a £5bn bid fiasco but a profit warning finally triggered his downfall
How to say ‘I’m a sellout’: Tumblr’s David Karp’s message of reassurance to his staff sounded very familiar

How to say ‘I’m a sellout’

Tumblr’s David Karp’s message of reassurance to his staff sounded very familiar
Why clubs are keen to take a stand

Why clubs are keen to take a stand

There's a real desire around the grounds for safe standing. But will the authorities listen?
In the end the fans decided Tony Pulis had made a pig's ear of the job at Stoke City

In the end the fans decided Tony Pulis had made a pig's ear of the job at Stoke City

Disillusion with a siege mentality and negative playing style made change inevitable
James Lawton: The James Hunt I knew is the subject of a new F1 movie

James Lawton: The James Hunt I knew is the subject of a new F1 movie

British driver was fascinating man whose epic duel with Niki Lauda in 1976 was typical of an era of glamour and glory – but also the ever-present threat of death
Stuart Hogg: Ready to climb his own Everest

Stuart Hogg: Ready to climb his own Everest

Lions' cub, 20, joins long line of players from Scottish borders club Hawick given opportunity to make his mark at highest level
Carl Froch handed rare chance of revenge with dream rematch

Steve Bunce on Boxing

Carl Froch handed rare chance of revenge with dream rematch against Mikel Kessler
'There is a battle going on inside us that is never discussed'

Masculinity in crisis?

'There is a battle going on inside us that is never discussed'
Have US shock jocks gone too far?

Have US shock jocks gone too far?

An incendiary remark from Rush Limbaugh may be the beginning of the end for outspoken right-wing US broadcasters
The ‘Beverly Hills’ of Surrey pays more income tax than big cities of the North

The ‘Beverly Hills’ of Surrey

Elmbridge pays more income tax than big cities of the North
Heavenly Bodies

Heavenly Bodies

Michael Landy's artistic marriage made in heaven... and hell