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MPs to grill Bank deputy governor
Bank of England deputy governor Paul Tucker is to attempt to clear up his involvement in the rate-rigging affair after being dragged into the scandal by former Barclays boss Bob Diamond.
Mr Tucker, a forerunner for the position of Bank governor when Sir Mervyn King steps down, faces a series of questions from MPs on the Treasury Select Committee over discussions he had with Barclays on the key interbank lending rate known as the Libor.
The deputy governor found himself in the spotlight after Mr Diamond disclosed a note of a phonecall between the two men, in which Mr Tucker appeared to encourage the bank to submit lower Libor submissions in light of concerns from senior Whitehall figures.
Meanwhile, the fierce debate over banking ethics will rage on as Labour leader Ed Miliband delivers a speech on his vision for the sector. He will point to the Libor rate-fixing scandal as vindication of his much-criticised attack last year on "predatory" capitalism and promise wide-ranging action.
Barclays has been the focal point for a row over banking culture after the bank was fined £290 million by UK and US regulators for manipulating the Libor, which affects mortgages and loans.
Mr Diamond, who resigned with immediate effect last Tuesday, told MPs he was left "confused" by the contentious phonecall with Mr Tucker. But despite being unclear about his motives, Mr Diamond said his reaction to the conversation was "appreciation of Paul Tucker for doing his job".
Mr Diamond told MPs Mr Tucker relayed concerns from senior Whitehall figures - which he took to mean officials within Government - that Barclays' Libor rate was too high - which could be a sign of financial weakness at the bank.
Mr Diamond said there were 14 or 15 other banks, including nationalised lenders such as Royal Bank of Scotland, who he knew had a weaker financial position than Barclays and were still submitting lower Libor rates.
Outlining his interpretation of Mr Tucker's comments, he said: "He felt that our Libor rates, relevant to the other 15 posters, could be lower." But he insisted he did not feel any action had been requested. "I didn't feel it was an instruction," he said.
However, Mr Diamond's account of the conversation ultimately led to the then president of investment banking arm Barclays Capital, Jerry del Missier, telling staff to submit lower Libor.