BoE and BBA Libor emails: Best of British

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By:
Jon Macaskill
Published on:

The recent publication of email exchanges from 2008 between the Bank of England and the British Bankers’ Association about Libor reform cast both in a poor light.

Angela Knight, chief executive of the BBA, displayed a very shaky grasp of language and detail. In one mail to the Federal Reserve about a draft release Knight said that "stigmisation" of contributing banks should be avoided, then concluded that "all other alterations are a mixture of better grammer [sic], better layout and better explanations – the usual drafting points".

Four years later the issue of Libor reform remains sadly unresolved and the imminent departure of Knight from her position as CEO of the trade group does not seem to have inspired the remaining staff to raise their game.

After the Bank of England released the cache of emails in response to a request from the House of Commons Treasury Committee, the BBA put out a statement on July 20 attempting to clarify its motives. This explained that the involvement of central banks and the Financial Services Authority had been requested for the "independant" [sic] foreign exchange and money market committee.

Perhaps Angela Knight CBE (as the former Conservative MP styles herself in emails) remains involved in the drafting of statements, in the twilight of her tenure. Knight announced in April that she would step down as head of the BBA, but remain in place until a successor was found. Anthony Browne, head of government relations at Morgan Stanley for EMEA and a former economic development policy director for London Mayor Boris Johnson, was appointed as the next BBA head in June, but will not take up the position until September..

The role of successor to Mervyn King as governor of the Bank of England is also up in the air, with former frontrunner Paul Tucker now a long shot, given the revelations about his involvement in what has become known as Liborgate.

Tucker, deputy governor responsible for financial stability, delivered evasive testimony to the Treasury Committee in July when questioned about the Bank of England’s failure to follow up on warnings about problems with Libor. But the single biggest count against Tucker in the succession stakes was the release of an email in which he referred to former Barclays CEO Bob Diamond as "an absolute brick".

Diamond is now firmly installed as the banker the British people most love to hate (previous incumbent Fred Goodwin, 2008-12). The revelation that Tucker had a chummy relationship with the demonized former Barclays head might well count against him more than evidence that the Bank of England took little meaningful interest in Libor reform.

Tucker’s appearance before the Treasury Committee was part of a series of hearings that appeared to be designed to demonstrate that British MPs can compete with their peers in Washington when it comes to grandstanding and mock indignation about financial market issues.

David Ruffley MP excelled in this pursuit, as he had in a previous hearing in April when he tore into a perplexed representative of Fitch Ratings on the subject of changes in UK bank ratings.

Ruffley failed to extract any noteworthy information from either regulators or the former top executives at Barclays during the recent Libor hearings.

But he was able to summon up an impressive air of outrage, especially while questioning Jerry del Missier, Diamond’s longstanding deputy at Barclays. Del Missier managed to sidestep the wild Ruffley punches, while Barclays chairman Marcus Agius made the MP look foolish with a measured response to attempts to force him to admit that he had been bad at his job.

Ruffley might have honed his ability to speak truth to power during expenses-paid fact-finding foreign tours he took in previous years courtesy of regimes including Syria, the Cayman Islands and Qatar. He also extended his market knowledge with consultancy work for an asset manager and on a bank-sponsored trip to New York while the Libor scandal was percolating in 2008.

But although the MP for Bury St Edmunds is a former lawyer he clearly still has some work to do before he can pin down an urbane representative of the British establishment like Agius.