Nobody ever thought Barclays was the only bank fixing Libor

Those in charge always knew that other banks were involved. So why have they got away so far?

Over the weekend, it became clearer than ever that Barclays were not the only bank involved in Libor rate-fixing, a fact which will have ramifications for the future of Paul Tucker, the Bank of England official tied up in the scandal, but also raises further questions about the proporitionality of the response, both official and popular.

A bumper report from the Sunday Telegraph's Philip Aldrick details the smoking gun:

The 2011 report by the Financial Services Authority into the collapse of Royal Bank of Scotland in early October 2008, three weeks before Tucker’s call with Diamond, makes clear the lender had lost its access to the money markets, noting that the “liquidity run reached extreme proportions”.

"On 7 October, 2008, RBS’s wholesale counterparties, as well as, to a lesser extent, retail depositors, were simply not prepared to meet its funding needs and RBS was left reliant on ELA from the Bank of England," wrote the FSA.

The reference to ELA, or Emergency Liquidity Assistance, is important as Tucker, unlike the rest of the market at that stage, would have known that the Bank of England had begun providing secret loans, first to crisis-ridden HBOS and then to RBS, that totalled nearly £62bn.

Speaking to the Treasury Select Committee in November 2009, Tucker told the MPs that without the emergency loans it “would have been a lot worse than it would have been” otherwise. “This was a classic lender of last resort operation,” he said.

Records of historic Libor submissions available on Bloomberg show that despite HBOS and RBS being on emergency life support they were both submitting Libor figures that appeared to show they could borrow at cheaper rates in dollars and sterling than Barclays throughout the months leading up to the collapse of Lehman Brothers in September 2008, and in the period afterwards.

The normal way that Libor - and, indeed, lending in general - works is that the weaker a bank is, the more it has to pay to borrow. In the autumn of 2008, that all fell apart: banks which were too weak could offer high rates to borrow at, but those high rates were themselves taken as a sign that the banks were on the brink of collapse.

The result of this is that there was basically no level at which HBOS and RBS could borrow all the money they needed (the technical parlance is that there was no level which "cleared" the market). It would have been impossible for them to submit true estimates of how much they'd have to pay to borrow large sums, because they simply could not borrow that much. To be accurate, Libor would have had to hit infinity per cent.

The Bank of England, and Paul Tucker particularly, must have known this, because even after RBS and Lloyds Banking Group had taken secret funding from the Bank (£60bn of loans to make up for their inability to get money through conventional routes) they continued posting Libor rates lower than Barclays.

This isn't to say that the other banks are necessarily as guilty as Barclays. While we know it is unlikely to be the only bank posting artificially low rates to look safe during the crisis, there is no indication as yet that any other banks were partaking in the far more dubious manipulation, aimed at simple profits, that occurred in the run-up to 2008.

Still, there must be someone at Barclays kicking themselves over the fact that they co-operated with the authorities. The intention was clearly to gain some credit, and possibly lax treatment, for pleading guilty and co-operating from the start. Instead, the bank has become the scapegoat for the crimes of an industry. As Felix Salmon writes:

In any case, when the other shoe drops, the headlines are going to be smaller: this kind of activity is never as shocking the second time around. Look at what happened to Citigroup, which was actually more evil than Goldman when it put together the Class V Funding III CDO. (The profits from Goldman’s Abacus deal went mostly to John Paulson; the profits from the Citi deal went straight to Citi.) Citi settled the case for $285 million — less than Goldman paid — and suffered almost none of the PR backlash that was inflicted on Goldman.

Stephen Hester must be feeling pretty lucky right now. Who wants to bet his name will come up as much as Bob Diamond's?

Stephen Hester, chief executive of RBS, which has been accused of manipulating Libor. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: ASA
Show Hide image

Harmful gender stereotypes in ads have real impact – so we're challenging them

The ASA must make sure future generations don't recoil at our commercials.

July’s been quite the month for gender in the news. From Jodie Whittaker’s casting in Doctor Who, to trains “so simple even women can drive them”, to how much the Beeb pays its female talent, gender issues have dominated. 

You might think it was an appropriate time for the Advertising Standards Authority (ASA) to launch our own contribution to the debate, Depictions, Perceptions and Harm: a report on gender stereotypes in advertising, the result of more than a year’s careful scrutiny of the evidence base.

Our report makes the case that, while most ads (and the businesses behind them) are getting it right when it comes to avoiding damaging gender stereotypes, the evidence suggests that some could do with reigning it in a little. Specifically, it argues that some ads can contribute to real world harms in the way they portray gender roles and characteristics.

We’re not talking here about ads that show a woman doing the cleaning or a man the DIY. It would be most odd if advertisers couldn’t depict a woman doing the family shop or a man mowing the lawn. Ads cannot be divorced from reality.

What we’re talking about is ads that go significantly further by, for example, suggesting through their content and context that it’s a mum’s sole duty to tidy up after her family, who’ve just trashed the house. Or that an activity or career is inappropriate for a girl because it’s the preserve of men. Or that boys are not “proper” boys if they’re not strong and stoical. Or that men are hopeless at simple parental or household tasks because they’re, well...men.

Advertising is only a small contributor to gender stereotyping, but a contributor it is. And there’s ever greater recognition of the harms that can result from gender stereotyping. Put simply, gender stereotypes can lead us to have a narrower sense of ourselves – how we can behave, who we can be, the opportunities we can take, the decisions we can make. And they can lead other people to have a narrower sense of us too. 

That can affect individuals, whatever their gender. It can affect the economy: we have a shortage of engineers in this country, in part, says the UK’s National Academy of Engineering, because many women don’t see it as a career for them. And it can affect our society as a whole.

Many businesses get this already. A few weeks ago, UN Women and Unilever announced the global launch of Unstereotype Alliance, with some of the world’s biggest companies, including Proctor & Gamble, Mars, Diageo, Facebook and Google signing up. Advertising agencies like JWT and UM have very recently published their own research, further shining the spotlight on gender stereotyping in advertising. 

At the ASA, we see our UK work as a complement to an increasingly global response to the issue. And we’re doing it with broad support from the UK advertising industry: the Committees of Advertising Practice (CAP) – the industry bodies which author the UK Advertising Codes that we administer – have been very closely involved in our work and will now flesh out the standards we need to help advertisers stay on the right side of the line.

Needless to say, our report has attracted a fair amount of comment. And commentators have made some interesting and important arguments. Take my “ads cannot be divorced from reality” point above. Clearly we – the UK advertising regulator - must take into account the way things are, but what should we do if, for example, an ad is reflecting a part of society as it is now, but that part is not fair and equal? 

The ad might simply be mirroring the way things are, but at a time when many people in our society, including through public policy and equality laws, are trying to mould it into something different. If we reign in the more extreme examples, are we being social engineers? Or are we simply taking a small step in redressing the imbalance in a society where the drip, drip, drip of gender stereotyping over many years has, itself, been social engineering. And social engineering which, ironically, has left us with too few engineers.

Read more: Why new rules on gender stereotyping in ads benefit men, too

The report gave news outlets a chance to run plenty of well-known ads from yesteryear. Fairy Liquid, Shake 'n' Vac and some real “even a woman can open it”-type horrors from decades ago. For some, that was an opportunity to make the point that ads really were sexist back then, but everything’s fine on the gender stereotyping front today. That argument shows a real lack of imagination. 

History has not stopped. If we’re looking back at ads of 50 years ago and marvelling at how we thought they were OK back then, despite knowing they were products of their time, won’t our children and grandchildren be doing exactly the same thing in 50 years’ time? What “norms” now will seem antiquated and unpleasant in the future? We think the evidence points to some portrayals of gender roles and characteristics being precisely such norms, excused by some today on the basis that that’s just the way it is.

Our report signals that change is coming. CAP will now work on the standards so we can pin down the rules and official guidance. We don’t want to catch advertisers out, so we and CAP will work hard to provide as much advice and training as we can, so they can get their ads right in the first place. And from next year, we at the ASA will make sure those standards are followed, taking care that our regulation is balanced and wholly respectful of the public’s desire to continue to see creative ads that are relevant, entertaining and informative. 

You won’t see a sea-change in the ads that appear, but we hope to smooth some of the rougher edges. This is a small but important step in making sure modern society is better represented in ads.

Guy Parker is CEO of the ASA