Former Barclays boss Bob Diamond was "highly selective" in his evidence to MPs, a powerful Parliamentary committee concluded on Saturday.
The Treasury Select Committee said Diamond's evidence on the Libor fixing scandal had fallen well short of the standards expected by Parliament.
The MPs published the initial findings of a probe into the circumstances surrounding the fixing of the Libor rate, which sets inter-bank lending prices, an offence for which Barclays was fined almost £60 million in June.
'Highly selective': MPs slammed Diamond's evidence to the Treasury select committee
In the report, the Bank of England was cleared by MPs of directing Barclays to artificially lower the Libor rate, as MPs found the bank was already doing so and it "did not need a nod, a wink or any signal from the Bank of England to lower artificially their Libor submissions".
But both the Bank of England and the Financial Services Authority (FSA) were criticised for failing to spot the manipulation of the Libor rate.
And the MPs found that "it is high unlikely Barclays was the only bank attempting this".
Publishing the preliminary findings report, committee chairman Andrew Tyrie said: "The Committee has called for action in a number of areas, including: higher fines for firms that fail to cooperate with regulators, the need to examine gaps in the criminal law, and a much stronger governance framework at the Bank of England.
"The sustained rigging of a crucial benchmark rate has done great damage to the UK's reputation. Public trust in banks is at an all time low.
"Urgent improvements, both to the way banks are run and the way they are regulated, is needed if public and market confidence is to be restored.
"The manipulation was spotted neither by the FSA nor the Bank of England at the time. That doesn't look good.
"Select committees are entitled to expect candour and frankness from witnesses before them. Mr Diamond's evidence, at times highly selective, fell well short of the standard that Parliament expects, particularly from such an experienced and senior witness."
Tyrie, a Tory MP, said the evidence presented to his committee had demonstrated failings both in internal monitoring and in regulatory supervision.
And he added: "The evidence that Paul Tucker (deputy governor at the Bank of England), Mr Diamond and Jerry del Missier (a former Barclays executive) separately gave about this manipulation describes a combination of circumstances which would excuse all the participants from the charge of deliberate wrongdoing.
"If they are all to be believed, an extraordinary, but conceivably plausible, series of miscommunications occurred."
The committee said a note from Diamond of a conversation between Tucker and himself, which some suggested showed figures in Whitehall and at the Bank of England may have been complicit in the rate fixing, could have been a "smokescreen" to distract attention from serious underlying issues.
MPs said while it was understandable the Bank of England had not kept its own note of the conversation given the wider banking crisis at the time, the lack of one was of "great concern" and the Bank should review its systems for when discussions are held with senior bankers.
Tyrie said he and his colleagues found the problems at Barclays went far beyond the fixing of Libor submissions.
He said: "Such misconduct is a sign of a culture on the trading floor, and higher up, that had gone badly awry."
Following the preliminary report, Mr Tyrie is to chair a Parliamentary Commission on Banking Standards.
The Treasury Select Committee said this should examine how the leadership of a particular chief executive could stop effective internal challenges or expose a bank to making strategic mistakes.
This week US authorities summoned three British banks for questioning over the rate-rigging scandal; Royal Bank of Scotland, HSBC and Barclays.
They were among seven banks handed legal notices demanding that they assist in an inquiry by the attorneys general of New York and Connecticut.
A Treasury spokesman said: "We welcome the Treasury Select Committee's detailed and prompt report, which Government will study in depth.
"The manipulation of key global benchmark rates has been another example of a culture of irresponsibility within the banking system, which the Government is determined to fix as quickly as possible.
"The Government has already established the Wheatley Review into Libor, which published a discussion paper last week and will produce final recommendations by the end of the summer, and any necessary legislative changes will be considered for inclusion in the Financial Services Bill or the Banking Reform Bill."
A Barclays spokesman said: "We will carefully consider this comprehensive report. While we don't expect to agree with every finding in it, we recognise that change is required, not least to restore stakeholder trust.
"That is why we have established an independent review of our business practices under Anthony Salz, and we expect that review to take full account of this report in producing its recommendations."
The BBA said: "This is a significant contribution to the work the British Bankers' Association and the regulatory authorities have been undertaking to ensure the integrity of the benchmark.
"The BBA is providing the research and findings from its current review to the Wheatley review and is engaging constructively with the Parliamentary Commission on Banking.
"The absolute priority of everyone involved in this process is to ensure the provision of a reliable benchmark which has the confidence and support of all users, contributors and global regulators."
Chris Leslie, shadow financial secretary to the Treasury, said: "The Chancellor needs to take significant steps in the current Banking Reform Bill and beyond if he is to rebuild public and global market confidence in the UK financial services sector.
"We know that Libor manipulation extends beyond just Barclays and we need to see the full picture as soon as possible.
"With Libor issues compounded by other recent allegations involving other UK banks, the Chancellor needs to get serious - which is why a comprehensive and independent inquiry was always our preference.
"We have been asking questions about why Libor has not been included in the new regulatory framework since March and were continuously snubbed by ministers.
"The Treasury have still not explained why they did not extend the regulatory framework to cover Libor in their Financial Services Bill this year even when they knew the FSA was investigating this problem.
"We also share the committee's view about the renewed need for stronger Bank of England accountability and governance under the changes proposed in his current Financial Services Bill - the Chancellor should look again at the Labour amendments he rebuffed in the spring on these issues."
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