Former Barclays chief executive Bob Diamond has called the behaviour of those responsible for rate-rigging at the bank "reprehensible".
He said he only learned the true extent of the scandal this month, and felt "physically ill" when reading incriminating emails from traders.
Mr Diamond said he "loved" Barclays and had resigned to protect its reputation. "I'm sorry, disappointed and angry."
He faced three hours of questioning by MPs on the Treasury Committee.
Mr Diamond, who resigned on Monday, was asked about who knew what and when, and the role of the Bank of England and the previous government in the rate-fixing.
He defended the bank's actions to address the problems, saying that Barclays acted quickly.
"As soon as we recognised [the problem] three years ago... we said 'let's get to the bottom of this'", he said.
The regulatory agencies involved, including the Financial Services Authority in the UK and US authorities, "applauded our co-operation", he added.
"This is not coming out in the court of public opinion."
He said a number of supervisors at Barclays had already been dealt with, while he understood that there "would be ongoing criminal investigations".
After the hearing, Conservative MP David Ruffley, a member of the Treasury Committee, said he was not satisfied with Mr Diamond's evidence.
"Either he was complicit or, frankly, incompetent," Mr Ruffley told the BBC.
He said he was astonished that Mr Diamond said he only became aware of the rate-rigging at Barclays last month.
"It was quite shocking testimony, in the sense that there was serious wrongdoing and he didn't know about it," the MP said. "Heaven knows what else was going on inside the bank."
Earlier, the prime minister said Barclays' actions had been "appalling".
David Cameron said it was "outrageous" that homeowners and businesses paid higher interest rates as a result of the bank's rate-rigging.
Labour leader Ed Miliband called for a two-part inquiry led by a judge, looking at both Libor and the wider culture of banking in the City, rather than the parliamentary inquiry proposed by the government. Mr Cameron said a judicial inquiry was not necessary.
In another development, the Bank's deputy governor, Paul Tucker, has asked to give evidence to the Treasury Select Committee in order to give his side of the story.
"Mr Tucker is keen to give evidence to the committee in order to clarify the position with regard to the events involving the Bank of England, including the telephone conversation with Bob Diamond on 29 October 2008," the Bank said in a statement.
On Tuesday, Barclays released Mr Diamond's note of a conversation in 2008 with Mr Tucker.
Mr Diamond wrote that Mr Tucker told him of concerns among "senior figures within Whitehall" about why Barclays was setting its Libor rate - the rate at which banks lend to one another - at the "top end".
Subsequently, the Libor borrowing rates submitted by Barclays fell, potentially understating the extent of the bank's borrowing costs.
Mr Diamond told MPs that Mr Tucker had not identified these "senior figures".
He said he was not shocked by what Mr Tucker had told him, and that this was not the first conversation he had had with Mr Tucker about Libor.
He said his first reaction was that Barclays' then-chairman John Varley needed to get to Whitehall and let government officials know that the bank was "funding fine" - that it was not struggling to borrow money from international lenders.
This was particularly important given that the bank was in the process of securing a multi-billion pound investment from the Middle East.
Mr Diamond reiterated that he did not view his conversation with Mr Tucker as an instruction to change its rates submissions.
Committee chairman Andrew Tyrie suggested that the conversation with Mr Tucker could have been interpreted as "a nod and a wink".
"It reads that way to almost anyone who looks at it," said Mr Tyrie.
Mr Diamond explained that Barclays' chief operating officer Jerry del Missier, who also resigned on Tuesday, "misunderstood" what was relayed to him regarding the conversation with Mr Tucker.
Mr del Missier subsequently directed traders to take actions to lower Barclays' Libor rates.
Mr Diamond said the FSA had investigated Mr del Missier's actions and were satisfied that they had been the result of a misunderstanding and the regulator would, therefore, take no further action against him.
This manipulation of Libor took place in 2008, around the time Barclays was raising funds privately in the Middle East - rather than taking emergency loans from the government like a number of other major UK banks - following the credit crunch and the onset of the financial crisis.
Barclays is also being investigated for manipulating Libor rates to increase profits as far back as 2005.
The bank is also being investigated in the US, where the Department of Justice is undertaking criminal investigations into other financial institutions and individuals. Banks are also facing a number of class-action lawsuits relating to the manipulation of inter-bank lending rates.
Mr Diamond's resignation came less than a week after Barclays was fined £290m for its role in Libor manipulation.
Source: BBC News