Reports released on Saturday revealed that a political row over the fixing of lending rates among the banks in Britain deepened after confidential advice was published from UBS. The advice was laid out to the former Labour government on the ways of reducing the key Libor rate at the pinnacle of financial crisis in the year 2008.
The Present Situation:
The blame has partially been pinned by the Conservative led coalition that trails in opinion polls, on the government that was lead by the previous Labour Prime Minister Mr. Gordon Brown for the fixing of rates by the traders of the Bank. Questions are rising whether or not the manipulation was directly or otherwise indirectly sanctioned by the government. Both the CEO and the chairman of Barclays Plc in UK have given their resignation this week after the bank has actually agreed to pay about 450 million dollars for the part it played in the rigging of the Libor rate in the phase starting from 2005 to 2009.this is actually used to settle the rates of interest on contracts worth trillions of dollars globally.
There has been a re-ignition of anger in Britain against the bankers because of this scandal. They are the ones who are actually blamed for the deep recession that the country is struggling to evolve from. According to the Labour party that is presently holding the opposition, the coalition government had made attempts to smear their party by suggesting that the confidential advice was nothing but an intentional manipulation of the Libor rate. The advice was handed over by UBS, a bank based in Switzerland in a note to the Treasury at a point of time when lending between banks has almost dried up for fears of collapsing. UBS in their document made a suggestion that there could be reduction in the Libor rate provided the government agreed to cut on the cost of the credit guarantee scheme (CGS) that backed the lending of the banks. This could be done to the levels that operated in a similar scheme in Netherlands. According to the USB there was nothing to comment on the report’s publication and no comments could be obtained on the part of the treasury as well.
Efforts to Improve the Conditions for Lending:
According to the document that was published in a business magazine simple proposals for the improvement of the legitimate policies were stated. The Labour party’s spokesman stated that the document included efforts to lower the costs of the banks’ lending among themselves during the crunch credit situation. The finance minister of the coalition, George Osborne was called upon to withdraw the false allegations on the people close to Brown were made that they were involved in the scandal of rate fixing. According to Chris Leslie the finance spokesman of Labour, there is not a single thing in the note that could prove the intentional fixing of the Libor rate in which the traders of Barclays were involved. Neither Osborne nor Gordon Brown was available to make an immediate response to that.