Wednesday, 4 July 2012

Independence and muddy ...

... waters, as the USA celebrate Independence Day we in the United Kingdom have nothing but loathing for banking, and this feeling of disgust is about to spread into politics;  at Westminster our elected representatives should stop and consider why they walk the hallowed halls of government when they consider the words of .....
Sam Fleming, Economics Editor at The Times when he writes of bankers and their political familiars ...
Until now the Libor-fixing saga has been a tale of nefarious dealings within the already tarnished world of investment banking. With the publication of Bob Diamond’s file note, one of Britain’s most influential and respected public servants has been pulled into the scandal for the first time. 

Paul Tucker, Deputy Governor of the Bank of England and the most senior set of eyes and ears in the City of London, is the most likely successor to Sir Mervyn King, the Bank’s Governor. As the point man on regulatory reform he is renowned for his impressive contact book and his understanding of the intricate workings of the financial system. 

Mr Tucker is a hands-on player, perpetually scrolling through messages on his BlackBerry when he’s out of the office as he keeps up with developments. While his boss has become notorious for his willingness to lecture the City, often in emotive terms, Mr Tucker has always shown more finesse. The list of potential candidates to succeed Sir Mervyn as Governor is long, but Mr Tucker has always been the heavyweight contender to beat. 

Anything Mr Tucker said from his perch in the Bank of England to a top banker in 2008 — a time of extraordinary stress in the world financial system — would have had massive weight. At the time, Barclays was battling suggestions that it was in financial trouble, and the fact that it was reporting higher-than-average borrowing costs to the Libor panel was making a tough situation worse. 

In Mr Diamond’s brief file note, Mr Tucker appears to hint that Barclays could lower its submissions to the panel. Such a move might have alleviated some of the concerns about its financial position. Senior Whitehall figures were worried about Barclays, Mr Tucker apparently said. While Barclays needed no advice from Mr Tucker, the central banker said that “it did not always need to be the case that we appeared as high as we have recently”. This could be interpreted as a “nudge nudge, wink wink” moment, a case of the Deputy Governor raising his eyebrow. 

To be sure, Barclays has not accused the Deputy Governor of explicitly encouraging any abuses of the Libor system — indeed, Mr Diamond insists that he did not believe that he had received any instructions from Mr Tucker at all. The FSA has reached the same conclusion. The Barclays case is that the words were misinterpreted by Jerry del Missier, a senior figure in Barclays’ investment bank, to whom Mr Diamond forwarded the file note. 

But by putting the file note in the public domain, Barclays have done a superb job of muddying the waters the day before Mr Diamond appears before the Treasury Committee. The e-mail raises serious questions for Mr Tucker to answer. In today’s Treasury Committee hearing it won’t just be Barclays that is under scrutiny but one of the leading lights in the Bank of England — plus “senior figures” in Whitehall, as yet unidentified. 
It seems that the notion of honesty, of public service, of the morality of duties has left these shores. When these disgusting bankers were manipulating markets, the little people were being exploited, my question is ....

... to what end ?

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