Tuesday, 10 July 2012

Tory MP Urges Osborne To Say Sorry To Balls

A Tory MP has called on Chancellor George Osborne to apologise to his Labour shadow Ed Balls for accusations he made over the Barclays rate-rigging scandal.
Andrea Leadsom made the request after the deputy governor of the Bank of England "absolutely" rejected suggestions that Labour ministers put pressure on him over Libor rates during the financial crisis.
Paul Tucker's denial came after Mr Osborne sparked a political row by declaring Mr Balls had "questions to answer" about the previous government's alleged involvement in the affair.
Ms Leadsom, who sits on the Treasury Select Committee, said Mr Osborne had made a mistake by claiming figures in Gordon Brown's inner circle were involved.
"Obviously he made a mistake and I think he should apologise," the MP told BBC Radio 4's World Tonight programme.
"I think it was a very valid discussion at the time about who knew what and it has now been completely squashed by Paul Tucker."
Mr Tucker asked to give evidence to the committee after former ex-Barclays boss Bob Diamond revealed they had discussed Libor rates in 2008.
Mr Diamond had earlier told MPs that Mr Tucker had relayed concerns of "senior figures within Whitehall" who felt Barclays' rate was too high.
This led to claims that the previous government had played a part in putting pressure on the bank to manipulate it.
But Mr Tucker, who is a frontrunner to succeed Sir Mervyn King as Bank of England governor, said on Monday that the record of the phone call had given "the wrong impression".
He said he had intended to ensure Barclays was not "inadvertently sending distress signals" about its financial health at a time when the market viewed it as the next in line for a government bailout.
He also rejected claims that the then Downing Street chief of staff Sir Jeremy Heywood, then City minister Ed Balls and former Treasury minister Baroness Vadera had asked him to pressure Barclays.
Mr Tucker said that concerns about Barclays' submissions existed at the time he spoke to Mr Diamond in October 2008, not only in Whitehall but also in the markets.
Officials and markets were monitoring Libor after international efforts to combat the financial crisis earlier that month and spotted that Barclays "continued to pay higher rates", he said.
The deputy governor said there was concern the bank was "next in line" to collapse and require taxpayer assistance after Royal Bank of Scotland and Lloyds Banking Group.
Mr Tucker said he contacted Mr Diamond to discuss its high Libor submissions because the economic climate was "fragile" and banks needed to be careful.
During his evidence, he also described the setting of the Libor rate as "a cesspit" and called for an end to the practice of "self-certification" under which banks submit figures on the basis of their own judgments rather than actual transactions.
Labour seized on his evidence as proof that Mr Osborne was wrong to make the claims and demanded he make a public apology.
Labour Treasury spokesman Chris Leslie said: "This is now the final nail in the coffin of the Tory smear campaign the Chancellor led last week.
"It is now crystal clear that the allegations he threw around were completely wrong and without foundation."


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