PrefBlog

The Bank of England knew that the BBA was taking a lackadaisical approach to LIBOR reform:

The Bank of England favored having its name removed from the 2008 review of Libor by the British Bankers’ Association over concern its improvement of governance didn’t go far enough.

The view was contained in 80 pages of correspondence between the central bank and the BBA and the New York Federal Reserve on the London interbank offered rate. The documents were published today after a request earlier this week from U.K. lawmakers investigating the scandal over the global rate.

“On governance, what the BBA say they will do seems broadly incrementally sensible as far as it goes, although we have concerns that they may not go far enough,” Bank of England official Michael Cross said in a note to colleagues. “Given this, we might want to have direct and indirect references to the Bank (and the Fed) removed.”

The note is dated June 4, 2008, a week before the BBA published a consultation document on its review of Libor. In a response the same day, a memo says Bank of England Governor Mervyn King “agrees the BOE references should be removed and replaced with ‘all interested parties.’” King had said in a note dated May 31 that the BBA’s initial proposals seemed “wholly inadequate.”
…
Contained into today’s release was an internal Bank of England document sent to Tucker on May 22, 2008, stating that the BBA, which oversees the setting of Libor, warned banks to submit honest rates on April 16, 2008. The spread between three- month dollar Libor and the overnight indexed swap rate widened 12 basis points in the three days following the warning, according to the note.

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums up 10bp, FixedResets off 2bp and DeemedRetractibles gaining 7bp. Volatility was normal.

And now I’m caught up with the market reports! Sorry for the recent lateness.

This entry was posted on Friday, July 20th, 2012 at 7:41 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.