‘This doesn’t look good, Mr Tucker.’ Andrew Tyrie made this observation towards the end of his Treasury Select Committee’s evidence session with Bank of England Deputy Governor Paul Tucker. He was talking about the minutes of a meeting in 2007 which suggested Tucker was aware of the lowballing of Libor, but he might as well have been summing up the witness’s hopes of taking the reins as the Bank’s next Governor.
Tucker insisted he was not aware that lowballing was taking place, but the minutes themselves said: ‘Several group members thought that Libor fixings had been lower than actual traded interbank rates through the period of stress.’
John Mann leapt on this, saying the minutes quite clearly referred to ‘people submitting returns below what in fact were the traded rates’. ‘That’s criminal fraud – that’s what that minute refers to,’ he added.
Tucker gave a strange reply to this: ‘We thought it was a malfunctioning market, not a dishonest one.’ It was strange because regardless of name he chose to give the problem – malfunctioning or dishonest – the problem itself had been identified.
MPs were also unimpressed by this, with Mann taking to Twitter to argue it was ‘worrying that Paul Tucker and others in the Bank of England did not know what was going on’.
Before the Libor scandal erupted, Tucker had been the clear leader in the race to take over from Sir Mervyn King as Governor. His desire to appear before the select committee at the earliest possible opportunity was part of an attempt at damage limitation on that bid. But the hearing itself may have damaged his chances still further.
P.S. Thomas Pascoe at the Telegraph has gone further, saying Tucker’s ‘lack of vigilance ought to immediately disqualify him from the race to succeed Sir Mervyn King as governor of the Bank of England’. He points out that Tucker was as head of markets at the central bank when Libor was being manipulated.