Exclusive: US Attacks UK Libor Response
US regulators have criticised the British response to the escalating international Libor-rigging scandal, labelling it another example of a "made-in-London" financial crisis.
I have obtained a note produced in the last few days by Pelorus Research, a highly-regarded financial research firm, which discloses comments made to its staff by officials at the US Treasury, the US Federal Reserve and the Commodity Futures Trading Commission (CFTC) that amount to a vote of no confidence in the City's ability to regulate global trading activities.
The comments - assuming they have been accurately recorded by Pelorus - are a devastating indictment of the UK's regulatory framework and threaten to undermine relations between Britain and the US just as the Bank of England prepares to become one of the world's most powerful bank regulators.
Pelorus quotes a US Fed official saying that "the two great disappointments [during the crisis] were the banking culture on display at Barclays and the slow reaction time of the UK authorities. They had to be continually prodded by us."
The CFTC was equally scathing, according to Pelorus, saying that the British Bankers' Association and the Financial Services Authority "have been particularly egregious in turning a blind eye".
Sir Mervyn King, the Bank of England Governor, is giving evidence to MPs on the Treasury Select Committee about the Libor scandal this morning.
The Pelorus note, which is marked 'Highly confidential: not for distribution', also quotes officials as saying that Libor was "a huge strike against the London financial market".
What's clear from these remarks is that US regulators have all but lost confidence in their London counterparts. It follows recent remarks over the crisis at JP Morgan, in which London-based traders lost billions of dollars for the bank, prompting the CFTC chairman, Gary Gensler, to attack UK regulation.
what do you think?
Anyone would think that the US never had banking problems. Where the heck did all this lot start anyway?
So true B W. The reason our Banks are in this mess is because of the US Gov't's policy on their own banks. And this is resulting in ordinary Bank branch workers being abused. I heard of one girl who was reduced to tears when she was screemed at in her supermarket!!!
Ronald George Halliday
The US has a nerve to lecture us on poor banking regulation. Ours is poor but where exactly did the financial crisis start. Thats right with the sub prime mortage fiddle. Lending to people who hadn't a hope of repaying the debt, pakaging these debts as highly desirable financial bonds and then selling them on to banks around the world who hadn't a clue what they were
Usual US gobby rubbish considering that the financial mess started with their sub-prime mortgage scandal.
Ronald George Halliday
Muck raking does not help anyone. Why not get the culprits out of all the banks and fine them, or jail them for fraud through mitigated cooperation, amongst themselves, and within the framework of upper echelons in the banking system.
Do you people REALLY not understand the message? The BoE - and by extension the government - are complicit in Libor fixing!