Barclays was in a "state of denial" over regulatory concerns with the bank following the Libor scandal, Bank of England Governor Sir Mervyn King told the Treasury Select Committee today.
Sir Mervyn said there were "genuine and deep" concerns among regulators over governance and a loss of confidence in the bank's bosses.
He added that Barclays had been found to "sail close to the wind" a number of times with regulators, which indicated a worrying pattern of behaviour.
But he said that the Barclays board had failed to take on-board the seriousness of regulatory concerns.
Asked when he was made aware of the Libor-rigging, Sir Mervyn replied:
The committee then turned to Bank Deputy Governor Paul Tucker about a New York Federal Reserve report in 2008 that flagged "deliberate misreporting" of Libor.
Mr Tucker said the report did not "set alarm bells ringing" that dishonesty was taking place but it did raise concerns about "credibility".
Sir Mervyn came into the debate and added:
Explaining his role in Barclays chief executive Bob Diamond's departure, the Governor said:
Sir Mervyn said it was acceptable to "sail close to the wind" once or twice but when it kept recurring "you have to ask questions about the navigational skills of the captain on the bridge". He added later:
It emerged last week that Sir Mervyn told Barclays chairman Marcus Agius that Mr Diamond no longer had the support of regulators before he quit.
But MPs have accused Mr Diamond of being "less than candid" after he played down the fraught relationship between the bank and regulators in recent months.
Mr Diamond is now facing calls to reappear before the cross-party committee.
His conversations with Mr Tucker have also been in sharp focus today after email exchanges were released showing personal congratulations from Mr Diamond on news of Mr Tucker's promotion to deputy governor.
In emails sent on December 11 2008, Mr Diamond wrote:
Mr Tucker replied: