Bank of England's No. Two Takes the Stand
July 10, 2012 • 7:37AM

The testimony of Paul Tucker, number two at the Bank of England, before the Treasury Select Committee of the British House of Commons Monday, resulted in further finger-pointing, but no significant policy debate.

On the eve of the testimony, the Bank of England had released two e-mails under Freedom of Information Act provisions, which quoted Tucker's communications to Barclays Bank in October 2008 on the question of the LIBOR rate being higher than that of other banks.

According to media reporting on the hearing, Tucker got "pretty angry" in denying that he had been suggesting that Barclays fake its LIBOR numbers, and he also denied that any minister of the British government, then headed by Labour Party Prime Minister Gordon Brown, had presured him to do so. Tucker did opine, however, that he now thinks the LIBOR market — which sets interest rates for international transactions, including derivatives, that amount to hundreds of trillions of dollars — was a "cesspit." He chose to blame the British Banking Association for letting it become that.

Meanwhile, both Labour Party head Ed Miliband and Shadow Chancellor Ed Balls (also Labour), gave speeches before the Cooperative Bank in London, on the policy implications of the scandal. Miliband's speech featured his absurd restructuring plan (see Monday briefing) and moralisms against "casino" banking, while Balls answered a question on the Glass-Steagall precedent evasively, saying, "The question for the banks is, can they show the leadership and cultural change they need by complying with the hard ringfence? The banks have got to show quicly that they will do this. We should be open to looking at every issue which comes up in advance of that."