Diamond-Tucker showdown looms - FT.com Bob Diamond's appearance at the Treasury select committee on Wednesday promises to be a full-on showdown between the former Barclays chief executive and the leading candidate to head the Bank of England. Barclays paid a record £290m in penalties last week as it admitted it had repeatedly understated its short-term borrowing costs from 2007 to 2009. But Mr Diamond has insisted that the BoE and the Financial Services Authority knew about the widespread practice of understating Libor, the London Interbank Offered Rate, the benchmark for $360tn in contracts and a measure of a bank's strength. Some of Barclays" defenders have gone further and suggested the BoE winked at the practice to maintain market confidence during the financial crisis. On Tuesday, Barclays released Mr Diamond's contemporaneous notes of a phone call on October 29 2008 with Paul Tucker, the BoE deputy governor in charge of financial stability, which they say support Mr Diamond's view. In the notes, Mr Diamond wrote that Mr Tucker told him that "senior figures within Whitehall" were asking why Barclays estimates of its Libor borrowing costs were higher than those of other banks. Mr Tucker "was certain we did not need advice [but] that it did not always need to be the case that we appeared as high as we have recently," Mr Diamond wrote in one of only three "notes to file" he has written in his entire career. The BoE deputy governor did not respond to an email seeking comment and he has not made his version of the conversation public. Both Barclays and the settlement documents from the case said that neither man viewed the conversation as an instruction to reduce Barclays" daily submissions to the Libor setting process. But Jerry del Missier, who also resigned on Tuesday, "misinterpreted" the notes and instructed his underlings to lower Barclays estimates of its borrowing costs, Barclays and the settlement documents said. On the day Mr Diamond spoke to the BoE, the bank's estimate for three-month Libor was 4 per cent. The next day it dropped to 3.4 per cent. As the two men were talking, several other UK banks were being rescued with government funds and speculation was rife that Barclays might also need help. It is not disputed that BoE officials, including Mr Tucker, knew that the official Libor rate was likely to be understating banks" funding difficulties. The minutes of the BoE's November 2007 sterling money markets liaison group, a periodic gathering of the big banks and the BoE, state: "Several group members thought that Libor fixings had been lower than actual traded interbank rates through the period of stress." The BoE has previously insisted it knew nothing about manipulation. Mr Diamond's notes also suggest that he complained personally to Mr Tucker about other banks undershooting their estimates. The BoE declined to comment Tuesday. The Barclays settlement documents say that it also raised the issue with the US Federal Reserve, which declined to comment.