Cameron, Osborne and Tyrie react to Barclays scandal

By Matthew Barrett
Follow Matthew on Twitter.

2.30pm Steve Baker MP has called for Bob Diamond, the Barclays CEO, to resign:

"Yes I do think Bob Diamond should resign, and I think more than that - the various authorities should be looking extremely carefully at whether any offences have been committed."

2pm David Cameron appeared on the BBC news channel this afternoon. He said the Government will take more action if more action is deemed necessary:

"In terms of what happens next, I would say that the regulators should use all the powers and means at their disposal to pursue this in the ways that they feel are appropriate. I’d also make the point that this happened some years ago under the previous government with the rules in place with the previous government. We are changing those rules and if there’s more we need to do to toughen that up, we’ll take that actions. We’ve already taken a lot of action to make sure we regulate our banks and financial services appropriately, but if there’s more that needs to be done, we’ll do it."

1pm update:

George Osborne made a statement to the House this afternoon. The Chancellor said that the FSA inquiry into Barclays demonstrates "systemic failures" in the financial system:

"It is clear that what happened at Barclays and potentially other banks was completely unacceptable, was symptomatic of a financial system that elevated greed above all other concerns and brought our economy to its knees."

Osborne said that Libor was not covered by Labour's financial services regulatory act, meaning those responsible cannot be prosecuted under criminal law. However, Osborne said that part of the Government's review into Libor will examine the need for new criminal legislation to tackle the wrongdoing. 

Osborne reiterated Matt Hancock (see below)'s point that Ed Balls and Ed Miliband were in the Treasury during the period leading up to the crash when the offences took place. Osborne took delight in pointing out Balls was not present to respond to Osborne's statement - his deputy, Rachel Reeves, had to respond. 

The full text of Osborne's statement is available here. 

11.15am update:

David Cameron has released the following remarks on the Barclays scandal:

"I think the whole management team have got some serious questions to answer. Let them answer those questions first. Who was responsible? Who was going to take responsibility? How are they being held accountable?"

Ed Miliband has called for those responsible to face criminal charges. 

10.45am update:

Matthew Hancock appeared on Sky News, and blamed part of the problem on the regulatory system overseen by Eds Balls and Miliband - and the inability for the Government to prosecute those responsible is also partly the fault of Balls and Miliband:

"The question of whether there are criminal sanctions is an important one. I have in the past called for more criminal sanctions for irresponsible behaviour at the top of systemically important banks... Part of the problem was that there weren’t these criminal sanctions. So you have Ed Miliband who worked in the Treasury during exactly this period calling for criminal sanctions. If there is no criminal investigation, this is because the rules that he set up didn’t have provisions for that."

 

***

Yesterday, Barclays bank was fined £290m after investigators from the Financial Services Authority and the US Commodity Futures and Trading Comission found evidence that the bank had tried to manipulate Libor, the benchmark bank borrowing rate, for several years in the run up to the financial crash. Andrew Tyrie, the Chairman of the Treasury Select Committee, has reacted to the news, saying he is "appalled, frankly" and calling it... 

"...absolutely shocking, it’s as bad as one can imagine really, this is a bank that’s been manipulating its returns for commercial gain, on a large scale... I’m extremely worried about it, and you know, it’s one step forward, two steps back with the banks"

Mr Tyrie told the BBC how he will use his Committee to seek answers from Barclays:

"Well I think that it’s likely we will want to see Bob Diamond to get a full explanation, I haven’t yet had an opportunity to discuss this with the committee, but I’ve just been reading the FSA report and it is just amazing stuff. ... It’s deeply concerning there’s clearly a lot more to clear up. It looks as if the FSA has done a good job investigating this - we will want to hear from them too. ... It’s unclear from the report that I haven’t finished reading yet how high up the bank this goes, it’s something, it’s the job of the FSA to investigate, and I will expect them to have done so very thoroughly and to give us a full explanation, and that’s what I’ll be demanding."

Mr Tyrie also called for "getting higher quality regulation in place"

"There has been a view around for a long time that there is something systemically wrong with part of the culture of banking and that goes back, all the way to the Lehman crisis and earlier, we were hopeful that a lot of this had been addressed. I still think a good deal of it has been addressed, but isn’t it a struggle and doesn’t it just bring home the importance of getting higher quality regulation in place. It’s clear too that when we come to look at the Vickers proposals, the fact that such appalling practices will overshadow people’s considerations of them."

Tyrie's shock and disgust at the Barclays affair was certainly in tune with the thoughts of Tory MPs tweeting this morning, who said:

Barclays scandal shows shocking irresponsibility and immorality: and the depth of culture change needed

— Matthew Hancock (@matthancockmp) June 28, 2012

Barclays' rate fixing is scandalous: so too is central bank market manipulation. Why allow it?

— Steve Baker MP (@SteveBakerMP) June 28, 2012

Shocking revelations about Barclays. Will be fascinating Treasury Committee evidence session with Bob Diamond. Looking forward to it!

— Mark Garnier (@Mark4WyreForest) June 28, 2012

Treasury Cttee testimony shows regulation and economics not enough to curb bank excesses--there must be complete change of culture #libor

— Jesse Norman (@Jesse_Norman) June 28, 2012