July 5, 2012 / 4:51 PM / 6 years ago

UK legislators back parliamentary banking probe

LONDON (Reuters) - British lawmakers backed a government plan on Thursday to hold a parliamentary inquiry into the professional and cultural standards of bankers brought into focus by the Barclays rate-rigging scandal that has deeply divided politicians.

They rejected a call by the opposition Labour party for an independent judge-led investigation, along the lines of an existing wide-ranging inquiry into British media standards.

Legislators voted 330 to 226 in favor of the parliamentary inquiry, announced by the government on July 2.

Although the vote fell short of the kind of cross-party backing the government had been seeking for the plan, Labour said afterwards it would support a committee that would be set up to conduct the inquiry.

Earlier on Thursday in a parliamentary debate, finance minister George Osborne and Labour’s shadow minister Ed Balls traded insults over who holds responsibility for the scandal of manipulating the interbank lending rate, Libor.

The row, which illustrates the political bitterness over Libor and the level of acrimony over the running of the economy, centered on an interview Osborne gave to The Spectator, a British political magazine.

In the interview, Osborne said people working under the previous Labour government were “clearly involved” in the scandal and that Balls, an adviser to the former labour chancellor, had “questions to answer”.

Balls dismissed the allegation in parliament as “utterly false” and demanded Osborne provide evidence of his accusation or retract it and apologize.

The debate, full of shouting and interruptions, was called by Labour after a week-long dispute over who should lead an inquiry and what it should cover.

Andrew Tyrie, chairman of parliament’s influential Treasury Committee and who the government wants to head the investigation, said he welcomed Labour’s support after a sometimes bitter debate over the best structure for the probe.

“I will do whatever the House (of Commons) asks me to do, but I believe it is only worth trying to chair this committee if it has the full support of all the major parties,” Tyrie said.

There had been doubts over whether Tyrie would agree to head the inquiry, after he said it was essential that it enjoyed cross-party backing.

Osborne said the government would seek to reach agreement with opposition parties on the details of the inquiry before parliament rises for its summer break later this month.

“I think what everyone now wants to do is get a resolution that all sides can agree on ... and we can get to the bottom of what went wrong in our banking industry and what went wrong with the Libor scandal and make the changes in legislation to make sure it never happens again,” Osborne said.

Britain’s Barclays bank was fined $453 million for its role in the rigging of the key Libor (London Inter-Bank Offered Rate) interest rate between 2005 and 2009, sparking fierce criticism about its culture and risk-taking, and forcing its chief executive Bob Diamond to step down on Tuesday.

Reporting by Tim Castle, Additional reporting by Stephen Mangan; Editing by Michael Holden and Michael Roddy

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