Barclays Documents Spread Some Blame Around

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In what may be interpreted as a move to lighten the burden of blame on its own shoulders, Barclays PLC (NYSE:BCS) (LON:BARC) has released documents that clarify its point of view and also reveal that the Bank of England and Federal Reserve were kept in the LIBOR loop. It also ropes in the FSA, the British Bankers’ Association, the U.S. Fed and other banks involved in setting the LIBOR rate.

The documents assume significance given that in a dramatic turn of events, both the chief executive and the chief operating officer of Barclays resigned as a fall-out of the LIBOR rate-fixing scandal.

In a particularly interesting memo dating from October 2008, Diamond relates his conversation with Paul Tucker, deputy governor of the Bank of England (extract): “Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing. His response was ‘you have to pay what you have to pay.’ I asked if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response, ‘oh, that would be worse.’”

It appears that the memo, and subsequent discussions around it led Jerry del Missier, to misinterpret it as an instruction from the Bank of England not to keep Libor so high, the bank said. Del Missier apparently conveyed that view to the bank’s Libor submitters.

The bank admits that “Barclays own submissions for tenors of 1 month to 1 year Libor were higher than actual Barclays trades on 97% of the occasions when Barclays had actual trades during the financial crisis.” However, according to the bank this may be read in the context of the findings by the New York Fed that “most banks’ Libor quotes were usually below their borrowing rates by as much as 39 basis points post the Lehman crisis.”

The release of these documents may heighten the already charged atmosphere that surrounds the scandal, and may draw into its fold more entities and personalities.

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