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Wednesday, July 04, 2012 

"Explosive revelations." Yeah, right.

It's not always a giggle, sitting down and reading the front page of the Graun on the evening after it went to bed. It most certainly won't be for Jill Treanor, Patrick Wintour and Heather Stewart, all of whom contributed to the report headlined "Diamond cuts up rough", presumably having been informed of the evidence Bob Diamond was going to give to the Treasury committee today:

The high-profile and outspoken banker is expected to unleash a wave of explosive revelations about the role of City watchdogs and senior Whitehall figures in the manipulation of crucial interest rates that landed the bank with a record £290m fine last week.

Just as it was expected (including by yours truly) that Rupert Murdoch would follow up his son's sensational dropping in it of Jeremy Hunt at the Leveson inquiry with more of the same only for him to do nothing of the sort, so we too waited in vain for Diamond to start dishing the dirt. The supposed "smoking gun" this time, the memo released by Barclays yesterday, which apparently showed that both the Bank of England and "Whitehall officials" had implied that Barclays was setting its own Libor rate too high, was almost dismissed by Diamond. It was important enough for him to make a note of the phone call he had with Paul Tucker, the deputy governor of the BoE, and then email it to the then chief executive and Jerry del Messier, who subsequently did interpret it as permission to fix the Libor rate lower, but Diamond instead took it as a warning that "Whitehall officials" were interpreting the high rate as meaning Barclays was in need of a bailout regardless of what the bank was saying. Tucker for his part has requested to appear before the committee next week and give his side of the story, which you have to suspect is now likely to back up Diamond's account.

Much of the rest of the session also resembled Murdoch senior's appearance before Leveson. Just as Keith couldn't be expected to take responsibility for the tens of thousands of workers under him, Diamond felt it was incredibly unfair that Barclays as a whole was being damaged due to the actions of just 14 traders. The concerns about the fixing of the rate had gone up to the "desk supervisor" levels, but no further. It didn't matter that Libor requests were often shouted across the trading floor, which normally would be a bit of a give away, as management figures were apparently in need of having their ears syringed. Diamond knew or had at least heard that all the other banks were attempting to fix their rates, and yet he didn't know of anything similar at the bank he loved until a month ago when he saw the Financial Services Authority's report. As for his potential severance package, which could be worth up to £22m, that was a matter for the board and the board only. There's as much chance as Diamond donating it to Shelter as John Mann suggested as there is Prince Charles reimbursing the taxpayer for the ridiculous 20 grand he spent chartering a jet from Aberdeen to London.

Quite why it is that the government is still insisting any inquiry into the Libor rate fixing has to be parliamentary and not independent is unclear. If they really want to nail Ed Balls to the wall, as George Osborne so clearly does, then why run the risk of Labour refusing to back an inquiry at all when an judge-led one would presumably reach the same result? There are plenty of good reasons for not holding an independent inquiry: few of them are ever worthy of the name (Leveson being a notable exception), they cost a bomb, and generally, they take longer to report than was first anticipated. Mostly they fail though because their focus is purely on employees or servants of the state, and the state has never been much cop at holding itself to account. Any wider inquiry into the banks would be the opposite of this. Moreover, today's evidence from the select committee showcased the flaws of parliamentary inquiries: every MP involved wants to ask at least one question, and not all are as forensic, composed or pointed in their phrasing and flow as a well prepared barrister can be, nor is Andrew Tyrie the equal of an authoritative, slightly world weary judge.

While it's impossible to dismiss the notion that Labour favours an independent inquiry as it will kick the whole subject slightly further down the road, not wanting to revisit their failure to regulate the banks properly, it's equally clear that both Cameron and Osborne seem determined to keep it in House for pure party political advantage. Osborne, the supposed great strategist and political brain who nonetheless delivered the omnishambolic budget, seems desperate to get the spotlight away from him and onto his opposite number. It doesn't matter that getting to the bottom of what really went wrong at the banks is ever so slightly more important than making Balls a temporary fall guy, this it seems is what the Conservatives are currently reduced to.

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