MPs were drawing parallels between the apparent collapse in ethical values at Barclays and the controversy that has engulfed News International, with some suggesting there may need to be a Leveson-style public inquiry into the bank's attempts to manipulate the Libor benchmark used to set loan and savings rates.
Mark Garnier, a Conservative Treasury select committee member and one of the MPs due to cross-examine Barclays' chief executive Bob Diamond about his personal knowledge of the scandal, said: "I think we may be heading towards something like Leveson."
He added: "I think Bob Diamond has some incredibly important questions to answer, not least because he was the head of Barclays Capital while this was going on, but also he is a derivatives expert – so he should know what is going on."
Chris Leslie, the shadow Treasury minister, also suggested a public inquiry might be necessary. "If this goes on, and it emerges this had spread to other banks and internationally, there is a very strong case for a specific inquiry into how there was systemic manipulation and rigging of key market statistics."
The parallels with Leveson were apparent during a Commons statement as MPs repeatedly asked the chancellor, George Osborne, what the regulators knew, whether warnings from within Barclays were picked up by the Financial Services Authority and if the government's advocacy of light-touch regulation stemmed from its excessive closeness to the City.
The political mood towards the banks is increasingly hostile. Liberal Democrat MP John Thurso claimed the banks were in "a sewer of systemically amoral dishonesty", while the former Labour business minister Pat McFadden claimed the banks needed a cathartic clause IV moment – a collective admission of moral failure.
The Treasury select committee chairman, Andrew Tyrie, spoke of a collapse of trust between MPs and the banks. Osborne repeatedly pointed out that the new Barclays scandal was a Labour regulatory failure.
The chancellor told the Commons that "the email exchanges between derivative traders and the Libor submitters read like an epitaph to an age of irresponsibility". He pointed out that the zenith of this age was 2005, 2006 and 2007, part of the period when Ed Balls, an advocate of light-touch regulation, was City minister.
Osborne claimed the Labour government had been "literally clueless about what was going on", adding: "The Labour party's trouble is that it is led by the cheerleaders for the age of irresponsibility, but they have yet to say sorry for it."
He added: "Shockingly, the scope of the FSA's criminal powers, granted by the previous government, does not extend to being able to impose criminal sanctions for manipulation of Libor."
Osborne's assault on the absence of criminal sanctions was helped by an own goal by Lord Tunnicliffe, the Labour Treasury spokesman. Referring to criminal sanctions, he told peers: "It is fair to say that you cannot find them in the current legislation, and yes, OK, it is our fault – I hope my leaders do not hear me say that.
"One of the reasons is that it is extraordinarily difficult to bring criminal sanctions into an area such as this where the criminal burden of proof is so high."
