John McDonnell MP, Labour’s Shadow
Chancellor, has today written to the Chancellor, Philip Hammond MP, to demand
the opening of a public inquiry into the scandal of Libor interest-rate
rigging.
Interest rate rigging could have
cost the public billions and public bodies affected are due compensation
New
evidence uncovered by the BBC Panorama programme points to collusion between
senior figures at the Bank of England and major banks to rig the critical
“Libor” interest rate that trillions of pounds of financial products depend on.
And
court transcripts, shown below, from the recent trial of bank staff accused of
rigging Libor also show that the rigging of this crucial interest rate was
known to regulators and Bank of England staff at least as far back as August
2005.
But
with small businesses and public bodies dependent on loans and more complex
financial products linked to the value of Libor, efforts to rig the interest
rate could have cost the public billions. Schools, NHS hospitals and local
authorities are all amongst those likely to be affected, particularly where
they had been sold more complex Libor-linked financial derivatives.
The
Shadow Chancellor is asking for an immediate public inquiry into the rigging to
establish who took the decision to apply this pressure, who was involved in its
implementation, who was aware that this was taking place, and whether any
impact assessment was undertaken at any point.
This
is essential in establishing the scale of compensation due to public bodies
from banks engaged in Libor rigging.
John
McDonnell MP, Labour’s Shadow Chancellor, said:
“The
revelations this week of the possible pressure being applied by senior public
officials on banks to rig one of the world’s most important financial metrics
demand an immediate response from this government. Continuing official silence
from the Chancellor is not acceptable when confronted with this scale of
rigging.
“It
is essential that we clarify who took the decisions to rig the Libor index, and
when, so that the schools, NHS hospitals and local councils that lost out can
be paid the compensation that is rightfully due and public confidence in our
banking system and official institutions can be restored.”
Follow this news feed: Labour