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Wednesday, July 18, 2018

July 13 (Bloomberg) — If we take Bob Diamond and Paul Tucker at their word, part of the Libor scandal at Barclays Plc can be chalked up to a series of comic misunderstandings, like a children’s game of telephone. It’s a bit much to swallow, but the spectacle sure has been fun to watch.

Both men agree that on Oct. 29, 2008, while the financial system was on the brink, Tucker, who is the Bank of England’s deputy governor, called Diamond on the phone. Diamond, who resigned last week as Barclays’s chief executive officer, was head of the company’s investment-banking business at the time.

In Diamond’s version, Tucker told him “he had received calls from a number of senior” U.K. government officials asking “why Barclays was always toward the top end of the Libor pricing,” according to a file note Diamond wrote that day. Tucker said “while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently,” according to Diamond’s memo.

Tucker, testifying before a U.K. parliamentary panel this week, said that last sentence of Diamond’s note “gives the wrong impression.” He wasn’t nudging Barclays to underreport its Libor submissions, he said.

Rather, Tucker said he was expressing concern that Barclays was paying too much to borrow money — and sending signals to the markets that it was desperate for funding, at a time when Barclays was widely viewed as the next big U.K. bank to need a government bailout. Tucker said he didn’t make any record of the talk, in spite of the Bank of England’s policy to make notes of important phone calls. He said he was too busy.