BBC Report: UK, US banking regulators were instructed to ‘rig’ interest rates during 2008 financial crisis

According to a report by the BBC, regulators in the UK and the US were aware of and participated in an effort by states to manipulate interest rates during the 2008 financial crisis. The newly uncovered evidence suggests that regulators concealed this information.

The evidence indicates that under pressure from central banks, lenders significantly reduced their interest rate estimates. However, when bankers were prosecuted for smaller-scale interest rate manipulation, this evidence was not presented in court.

Previous allegations had been made against regulators regarding their involvement in interest rate manipulation, but this evidence reveals a wider international effort involving central banks across the Western world.

Reportedly, central banks such as the Bank of England, Banque de France, European Central Bank, Banca d’Italia, Banco de Espana, and the Federal Reserve Bank of New York extensively intervened in setting Libor and Euribor rates in October 2008. These benchmark interest rates track the cost of interbank borrowing. The actions were allegedly aimed at artificially calming the market during a time when bank lending was severely restricted.

The evidence, which was disclosed to investigating agencies like the FBI and the UK’s Financial Services Authority (FSA) in November 2010, was never made public and has been kept secret from Parliament, Congress, and the general public.

Andrew Tyrie, the former chair of the UK Treasury Committee of MPs during the Libor inquiry, suggests that Parliament may have been misled. He stated that the evidence strongly indicates that the committee’s inquiry into the Libor scandal was not provided with the complete truth.

The suppressed evidence includes a recording from 2010 of an interview between FBI investigator Mike Kelly and Peter Johnson, a Barclays bank employee responsible for submitting Libor rates. In the interview, Johnson reveals that he was instructed to report artificially low Libor rates under pressure from both the Bank of England and the UK government.

Published data on Euribor submissions during that period supports these claims, showing significant declines in French banks’ estimates of borrowing costs, suggesting coordination at a national level.

Senior Conservative MP David Davis has called for a fresh investigation, expressing concerns that Parliament may have been misled and individuals may have been coerced into perjury.

The US Department of Justice and the UK’s Serious Fraud Office have prosecuted traders for Libor manipulation, but without this evidence.

Regulators involved have either declined to comment, rebutted the claims, or stated that they followed disclosure rules. The Bank of England described the allegations as unsubstantiated, while the European Central Bank strongly refuted the assertions and emphasized the misrepresentation of a central bank’s role in implementing monetary policy.