UK Chancellor sets rapid reporting schedule for Libor scandal enquiry

Great Britain’s Chancellor has announced the investigation into the UK Libor rate fixing scandal, now engulfing many British banks, will produce its findings and recommendations on how to fix the system by summer, to include them into the pending UK Banking Reform Bill later this year.

The recommendations could bring in even more sweeping reforms to the Bill, which has already faced wide-ranging change proposed by the  Independent Commission on Banking, chaired by Sir John Vickers.

Chancellor George Osborne (pictured) has also confirmed in parliament today that cash raised from fines for the Libor manipulation scandal, including the £59.5m one levied by UK authorities against Barclays, will go direct to the public purse.

Other banks are also being investigated, though no findings have yet been made on whether or not they were involved.

Separately, it has been reported Paul Tucker, a senior figure at the Bank of England, spoke with Barclays CEO Bob Diamond in 2008 about how much Barclays was claiming it had to pay to borrow money.

Today, Osborne’s opposition equivalent Ed Balls attacked the Conservative party’s decision to make the enquiry a cross-party review, and not a “full, independent” enquiry chaired by a judge.

Osborne said the review the Tories are planning would investigate how Libor was set, whether it was preferable to use concrete data rather rely on quotes fed via the British Bankers Association, whether setting key rates such as Libor should be a regulated activity, and what criminal and civil sanctions might be needed to deal with breaches in future.

The UK Serious Fraud office has said today it is examining whether it can bring charges separately against those involved in the scandal.

The government’s bright spotlight on the banking industry is addressing “the broader issue of standards and culture in some parts of the financial industry that grew up before the crisis and that still needs to change,” Osborne said.

He said the review should be able to summon and question people on oath.

“The failure to regulate banks in the boom years lost this country billions of pounds. It is time to deal with the culture that flourished in the age of irresponsibility and hold those that allowed it to flourish to account.”

His words were a veiled threat to members of the Opposition – including the Shadow Chancellor – who were involved in drafting laws to regulate the financial district before and during the 2008/2009 financial crisis.

Ed Balls said he “regretted as a Minister [back then] and central bankers around the world that we did not see the financial crisis building, and take action.”

But the Opposition member of parliament added: “We all have responsibility to do better in future, and reform our banking industry and rebuild trust, but we do not believe another parliamentary enquiry can do the job”.

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