When the 'LIBOR fixing' story broke, I immediately wondered who else stood to benefit from lower interest rates. The government was my conclusion and so I tweeted my thoughts but no more. Today I read in the Mail that:
'Leaked documents last night brought the interest-rate fixing scandal that has shaken Britain's banks closer to the heart of the last Labour government. They suggest that Baroness Vadera, a former Cabinet Office minister and one of Labour's chief economic advisers, told officials in 2008 that bringing down the rates which determine how much banks lend to each other would be 'a major contribution to the stability of the banking system and to the health of the economy'. A paper prepared by the peer with former colleagues at the bank UBS was headed 'Reducing Libor' – the name for the inter-bank lending rate at the centre of the scandal. The document was circulated among officials and Lady Vadera's ministerial colleagues at the height of the credit crunch in 2008 and concludes: 'Getting Libor down is desirable.' But the briefing note was prepared only days after Barclays boss Bob Diamond, who is fighting to save his job after traders at the bank were revealed to have made millions by fixing the rate, discussed the issue with Bank of England deputy governor Paul Tucker.'As far as I am aware nothing, so far, points to Lady Vadera or her bosses Gordon 'light touch' Brown and Ed 'bully boy' Balls in any way requesting LIBOR rates be lowered artificially. However it is worth asking if this document shows how keen the labour government was to keep Libor then if/how that concern was communicated to bank bosses and how did they respond.