LONDON (Reuters) - Adair Turner, chairman of the Financial Services Authority (FSA), appeared before a House of Commons Treasury Select Committee on Monday as part of a probe into a Libor interest rate rigging scandal.
Below are comments from Turner and FSA staff Andrew Bailey and Tracey McDermott:
“Yes there was a contact there, but the evidence trail shows they were deliberately not being totally honest with us about what was going on.”
“Whatever the form was, the substance was not working.”
“I think there needs to be far more emphasis on internal auditors at large banks. I frankly don’t think they did.”
“There are a number of other banks and institutions under investigation. We have seven institutions we are looking at. They are not all British banks.”
“Part of the story of the FSA at that time is that we did have, we never used the word, a somewhat light touch regulation in particular in those areas of wholesale conduct.
“We were only to a small extent focused on the activities of investment banks. We only had about five people on Barclays and five people on RBS. At one stage we only had one person that was shared between Barclays and RBS.”
“I was not aware of issues to do with manipulation of Libor until November 2009. That was when Hector Sants briefed me and said there was a major case we could be involved in.”
“It’s probably the case that the total number of people identified in this investigation and others will end up as a relatively small number but nevertheless there has been a culture that has allowed this to occur.”
“We are certainly pursuing investigations wherever they take us. My strong suspicion if it’s going on it’s going on a massively reduced scale.”
“I don’t think I ever thought of manipulation of Libor until I was informed ... in mid 2009 when Hector Sants briefed me on major enforcement cases. I don’t think I had ever previously thought ... had ever occurred to me, that this was something that you could manipulate.”
“He (Hector Sants) explained the FSA’s historical concerns re Barclays control and risk appetite. That led me to be concerned about the behavior ... there was a repeated pattern of behavior that was not showing signs of changing.
“There was a cultural tendency to always be pushing the limits.”
Asked was Barclays trying it on: “Yes. There was a culture of gaming. It had to change.”
“This is the only letter of this type I have sent as chairman of the FSA.”
“We would expect them to take it very seriously. We would expect the chairman to talk to the CEO and to the board. Agius stressed to me that he and the board would take it very seriously.”
“It was widely known in 2007, 08 that the Libor market was not operating in the way it had previously done.”
Reporting by Kate Holton