The BBC’s Panorama has a recording of a conversation between two Barclays employees, one a LIBOR submitter. We don’t know in which manner the recording was time stamped, but it is reported to have taken place on 29 October 2008, the same day as a high profile telephone conversation between Bob Diamond, (then running Barclays Capital), and Paul Tucker (most recently a deputy governor of the Bank of England). Bob Diamond wrote a note following the unrecorded conversation, (the Tucker note), which was the subject of persistent questioning when Diamond appeared before the Treasury Select Committee (TSC) in 2012.

The text of the note was shared with the TSC:

Further to our last call, Mr. Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always towards the top end of LIBOR pricing. His response was “You have to pay what you have to pay”. I asked if he could relay the reality that not all banks were providing quotes at the levels that represented real transactions, his response “oh, that would be worse”.

I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing. Equally, I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business. This latter point has on occasion pushed us higher than would otherwise appear to be the case. In fact, we are not having to ‘pay up’ for money at all.

Mr. Tucker stated the levels of calls he was receiving from Whitehall were ‘senior’ and that 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.

In Panorama’s call the Barclays LIBOR submitter is told:

“The bottom line is you’re going to absolutely hate this… but we’ve had some very serious pressure from the UK government and the Bank of England about pushing our LIBORs lower.”

It appears that we are being asked to accept that the Bank of England itself was coordinating artificially low LIBOR submissions. The title of Panorama’s piece is “The Big Bank Fix”.

Already, Labour’ shadow Chancellor John McDonnell has called for an immediate high-level investigation.

Enforcd accessed the publicly available TSC transcript,on which the following is based.

According to Diamond, Tucker’s purpose was to alert him that there was concern in Whitehall about Barclays LIBOR rates and why they were so high. In Diamond’s words:

“It was important to me to get to John Varley, whom my note was to, so that he could get in touch with Whitehall and make sure that there wasn’t a misunderstanding that Barclays was high or whether other people were posting rates that made us appear to be high and that there wasn’t a function of not being able to get funded. The importance of the call to me was the heads-up about the concerns in Whitehall, who felt that since we were the high LIBOR submission, it might mean something more than it meant or something different than it meant.”

The spectre of nationalisation was haunting the land and Diamond was concerned that persistently high LIBOR rates might force the government’s hand. The Committee Chair (Jesse Norman MP) frankly suggested that Diamond had been asked by Tucker to reduce Barclays’ LIBOR submission. It is not clear from the transcript why the Bank of England (or Tucker) might have wanted this.

What is a matter of fact is that between September 2008 and December 2008 LIBOR rates (and presumably submissions) dropped from 4.05% to 1.43 (for 3 month LIBOR). Diamond ascribed this general downward trend to Barclays’ successful recapitalisation, raising £6.7 billion. Panorama’s is the more conspiratorial interpretation.

Barclays Group Treasury function had already been influencing its LIBOR submitters since 2007, well before the phone call. And traders had been working with submitters across banks to fix LIBOR since 2005. Jerry del Missier (Diamond’s right hand man, and for a time Barclays’ highest paid employee) was copied in to the Tucker note. He concluded that an instruction had been passed from the Bank not to keep the LIBORs so high, and therefore passed down the direction to that effect to the submitters.

That excessively high, or excessively low LIBOR submissions are suggestive of manipulation is not in question. But based on the BBC’s article, Panorama may have overstated the importance of the recorded call. All it confirms is that Jerry del Missier passed on the message he thought he needed to pass on, having been copied in to Diamond’s note of his conversation with Tucker.

The Bank of England sets the base rate. It has rate setting in its culture, and a mission to maintain financial stability. If it thought it could get LIBOR down 2.5 % in a month by raising an eyebrow (as Governors of the Bank of England were once thought to do), it may well have been in the public interest.

Panorama: The Big Bank Fix was broadcast on BBC One on Monday 10 April at 20.30pm.