The Guardian‘s Graeme Wearden reports live: Barclays has dragged the Bank of England, and the last Labour government, deeper into the Libor scandal.

Its submission to the Treasury Select Committee includes an email apparently written by Bob Diamond [the CEO of Barclays who resigned today] on 29 October 2008 (when the crisis was raging), following a telephone call with Paul Tucker of the Bank of England. In the message, Diamond writes that Tucker told him that “a number of senior officials in Whitehall” had expressed concern over the Libor numbers that Barclays had been reported (the rate at which other banks would lend to it).

The email goes on to suggest that other banks have been submitting rates that did not reflect their true cost of borrowing, and concludes by suggesting that Tucker had suggested that Barclays Libor submissions did not need to be so high.

Here is a full transcript of the message, which was sent to then chief executive John Varley, along with Jerry del Missier:

Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing. His response was “you have to pay what you have to pay”. I asked if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response “oh, that would be worse”.

I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing. Equally I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business. This latter point has on occasion pushed us higher than would otherwise appear to be the case. In fact, we are not having to “pay up” for money at all.

Mr Tucker stated the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.
RED*

This is dynamite, although I must caution that the Bank of England has not had a chance to respond.

*: RED, incidentally, stands for “Robert E Diamond”, and is the nickname used by Barclays staff.