BOOK EXTRACT
Book extract: Traders ‘were ordered to rig Libor’ in 2008 crash
The second extract from Andy Verity’s book Rigged reveals that, in a previously secret interview, the rate-setter Peter Johnson told investigators that central banks and governments had applied the pressure, but his evidence was never made public
An FBI interview at Canary Wharf focused on bank borrowing costs around the time of an October 2008 meeting in Paris at which Angela Merkel, Nicolas Sarkozy and Gordon Brown discussed the financial crisis
An instruction from Downing Street to lower Libor, a measure of the price at which banks lend to each other, on October 29, 2008 wasn’t the only thing that no one was supposed to know about. It was much bigger than that.
Barclays’ Mark Dearlove and Jon Stone, the bank’s group treasurer, told the Bank of England on November 4, 2008, they thought there had been political pressure on French banks to cut their contributions to Euribor, the equivalent of Libor for euros. That was corroborated by the data on what interest rates each bank had submitted.
The French banks had suddenly, as one, dropped their submissions of their estimates of the cost of borrowing euros in the days that followed a co-ordinated central bank
