Libor scandal may have triggered repossessions, says Shapps

Tuesday 3rd July 2012

Grant Shapps said that the Libor scandal may have been a ‘contributory factor’ in some home repossessions following the credit crisis.

Meanwhile, Barclays chief executive Bob Diamond resigned with immediate effect this morning.

The American banker said: "The external pressure placed on Barclays has reached a level that risks damaging the franchise."

He added: "I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth."

The housing minister issued his warning as David Cameron and George Osborne announced a fast-track Parliamentary inquiry into the behaviour and culture of Britain’s banks.

The inquiry, which is not the independent judge-led inquiry demanded by Labour, will report back before the end of the year.

Asked yesterday in the Commons, by Labour MP Simon Danczuk whether the scandal may have contributed to people having their homes repossessed, Shapps said: “All the research into homelessness proves that there are a lot of different causes, of which the Libor rate may have [been] a contributory factor, if indeed it transpires that mortgage rates have been adjusted as a result.”

A Barclays source said they did not believe the bank’s actions had caused anyone to lose their home but a spokesman at the Department for Communities and Local Government said: "Clearly the mortgage rates paid by millions of home owners may have been affected by the actions of these traders as they manipulated the Libor rates up and down, depending on their trading position - and this could have put pressure on struggling households."