Secret Recording Implicates Bank Of England In Libor Rigging

In the financial crisis, LIBOR rates soared due to payment uncertainty (recall Bear Stearns, Lehman, etc).

Banks lowballed their borrowing rates so as to make their financial conditions look better than they were.

LIBOR stands for London Interbank Offered Rate, the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow overnight from other banks.

In June 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions. The LIBOR rigging admission cost Barclays’ CEO, Bob Diamond, his job. Two traders went to jail.

The Bank of England officer who was in talks with Bon Diamond at the time, Paul Tucker, denied to the parliament in 2012 allegations that he put pressure on Barclays to rig LIBOR to ease funding tensions.

Today, However, the BBC reports Bank of England Implicated in Secret Recording.