LONDON (Reuters) - Britain’s parliament will investigate an interest-rate fixing scandal that has rocked London’s banking sector, in a wide-ranging inquiry which a source said would encompass issues such as culture and standards in the industry.
“I want us to establish a full parliamentary committee of inquiry involving both houses,” Prime Minister David Cameron told parliament on Monday, stopping short of giving further details on its full remit.
“This committee will be able to take evidence under oath, it will have full access to papers and officials and ministers including ministers and special advisers from the last government.”
The government has come under increasing pressure to take a closer look at the bank sector, which has felt the force of public anger since taxpayers bailed out several banks during the 2008-9 financial crisis.
That pressure intensified last week when Barclays was fined for trying to manipulate the London Interbank Offered Rate (Libor), used worldwide as a benchmark for prices on about $350 trillion of derivatives and other financial products.
The opposition Labour Party had threatened to trigger a vote in parliament on whether there should be a judge-led independent inquiry into the banking sector’s excesses, culture and blunders.
The UK source said the investigation, to be outlined by finance minister George Osborne at around 1530 GMT, would be “wider than a narrow review into Libor and criminal sanctions ... (and) will encompass culture and sanctions.”
The government is likely to come under fire for not establishing an independent inquiry - similar to the current Leveson inquiry which is investigating standards in the media.
However, some ministers may be wary of any investigation which could make their own planned overhaul of the industry’s current regulatory regime look inadequate.
While it is politically expedient to “bash the bankers,” the Conservative-led government will also be wary of attacking a crucial sector in Britain’s economy which is still struggling to function properly after the credit crunch.
Labour leader Ed Miliband has called on Barclays Chief Executive Bob Diamond to resign after the bank’s involvement in the interest rate-fixing scandal.
That case is likely to be just the tip of the iceberg, with several other banks under scrutiny for trying to manipulate Libor.
Barclays Chairman Marcus Agius fell on his sword in an effort to stem the scandal, but critics say that is not enough and that the whole industry needs to change.
“I want to see a new code of conduct for bankers ... For all we know, some of the people who were part of this scandal might still be working in other banks,” Miliband told ITV on Monday.
“There also needs to be that full inquiry, that full public inquiry into exactly what has happened throughout our banking industry.”
Additional reporting by Tim Castle; Editing by Erica Billingham and David Holmes