Paul Tucker’s rise to the governorship of the Bank of England was thwarted after he was embroiled in the Libor scandal that led Barclays Plc’s three most senior executives to stand down following a record fine.
Tucker was last week described as 'home and dry' by bookmaker William Hill Plc, which made him the favorite for the job at odds of 1-4, meaning a 4-pound ($6.40) wager would return a 1-pound profit. Instead, Chancellor of the Exchequer George Osborne named Bank of Canada Governor Mark Carney as Mervyn King’s replacement, the first foreigner to hold the post.
Bloomberg reports that Tucker, a three-decade veteran at the bank, was tainted after Barclays was fined a record 290 million pounds in June for manipulating the London interbank offered rate, the benchmark for more than $300 trillion of securities. The deputy governor denied accusations from lawmakers he pressed Barclays to lower its Libor submissions after the bank released details of a 2008 phone call with Bob Diamond, then head of its investment bank. He was also criticized for ignoring warnings from other regulators that the way the rate is calculated was flawed.
'His candidacy received blows from which it couldn’t recover', said Philip Keevil, a former head of investment banking at S.G. Warburg & Co. and a partner at advisory firm Compass Advisers Group LLC. 'He will be very disappointed, but he is too much associated with the ancien regime'.
Tucker, 54, said the Libor investigation had uncovered a 'cesspit' in the City of London, Europe’s largest financial center. London’s light-touch regulatory regime has also been damaged this year by JPMorgan Chase & Co.’s (JPM) $6.2bn trading loss as well as Kweku Adoboli’s $2.3bn of unauthorized trading at UBS AG. (UBSN). The Bank of England’s powers are also being expanded into the realm of financial oversight as the Financial Services Authority is dissolved.