The scandal over LIBOR, a key global interest rate, has already hit banks around the world. Today, it moves to the very heart of the British government.
A deputy governor of the Bank of England will be quizzed by parliament on whether he told banks to lie to about the crucial interest rate.
Paul Tucker is one of the most influential central bankers in the world. Many think he's next in line to be in charge of the Bank of England. But he's been dragged into this scandal over LIBOR, the interest rate that sets the rules for trillions of dollars of financial contracts.
Big banks report the rates they pay to borrow money — that's how LIBOR is set. The hearing centers around a phone call Tucker made during the financial crisis in 2008. He called the head of Barclays bank and basically said, hey, I noticed that your interest rates seem a little high. That might have raised the specter that Barclays — like so many banks at the time — was in trouble.
So after that phone call, word went out through Barclays to get the rate down. Traders at Barclays had already been messing with the rates — after this call, it became widespread.
Today, a parliamentary hearing asks the question: Did Tucker, a governor of England's central bank, encourage the lying? This week, the buck passes from the banks to the government.