James Moore: Mervyn in the hot seat... what MPs will ask the governor

MPs will want to know what he made of Paul Tucker's conversation with Bob Diamond

James Moore
Tuesday 17 July 2012 01:33
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Sir Mervyn King, the Governor of the Bank of England, is likely to face two key lines of questioning over his own behaviour on the Barclays affair when he appears before the Treasury Select Committee today.

Firstly, MPs will want to know what he made of his deputy Paul Tucker's conversation with former Barclays chief executive Bob Diamond. The latter's note of this appeared to suggest that the Bank was instructing Barclays to falsely lower its submissions for setting Libor interest rates.

Mr Tucker, however, strenuously denied that he ever made such a suggestion to Mr Diamond. And Mr Diamond said he did not interpret the conversation that way, despite the note.

But his number two Jerry del Missier saw things differently, and passed what he saw as an instruction down to Barclays' money market desk.

Mr Tucker did not take his own note of the conversation with Mr Diamond, despite its importance. This left MPs aghast. The issue of note taking at the Bank is therefore also likely to come into focus.

The second issue MPs will want to hear about is what role Sir Mervyn played in the departures of Mr Diamond and Mr del Missier. Mr Diamond is on record as saying that the regulators' view on his position at the bank changed between the announcement of Barclays accepting fines of £290m as a result of Libor fixing and his departure days later. So what changed the Bank's view during that period?

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