Mervyn King Interrogated over BoE’s Role in Libor Scandal
(eToro Blog) The ongoing investigation into the Barclays Bank Libor scandal has now drawn in the head of the Bank of England, Mervyn King. The Treasury Select Committee of the U.K. Parliament had called on several key members of the Bank of England as a matter of course on another banking issue, but analysts knew that they would not miss out on the chance to question the bank governor not only as to his role in the scandal, but his efforts to oust Barclays CEO Bob Diamond who did ultimately resign.
For his part, King had soundly condemned the individuals involved in the rate fixing saying that there was something very wrong with the banking industry which resorted to deceit to make money. But harsh words aside, King naturally faced hard questions regarding the central bank’s improper supervision and failure to address the issue when it was first brought to their attention in 2008 by banks, as well Timothy Geithner, who was the then head of the U.S. Federal Reserve’s New York branch.
Deputy BOE governor Paul Turner was believed to have had some prior knowledge of the rate fixing, but was eventually absolved by the Committee. Yesterday, Turner advised the Committee members that he had recommended to Marcus Agius, Barclays Bank chairman, that Diamond should be forced to leave, but was surprised by Agius’ resignation in his stead. Agius had earlier confirmed that King had made it clear that Diamond would not receive any support from bank regulators.
King said that he called upon the Barclays chairman and the senior independent director to discuss what he felt was their “state of denial” in regards to their loss of regulators’ confidence as a result of the scandal. As Turner noted, had Diamond been allowed to stay on despite calls for his resignation, it would have been a distinct disadvantage to Barclays Bank shareholders.
While other European equities are higher on Fed easing hopes, the London FTSE is down by 22.69 points as of this writing, and sentiment on OpenBook is primarily bullish with 79% of traders buying. The GBP/USD is trading higher at 1.5634, and sentiment on OpenBook is likewise bullish but to a lesser extent with only 64% buying. OpenBook guru santoshtiwari from the U.K. continues to be bullish as well, and has several long trades currently open. The guru’s 76.1% allocation in the pair over the month has gained 9.7%. The guru remains a favorite among OpenBook’s general population who are looking for a proven trader, as evidenced by 16,315 followers and 2,095 copiers.
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