Barclays Bank CEO Bob Diamond, who initially resisted resignation over his bank’s fraudulent manipulation of the benchmark Libor inter-bank lending rate (as well as Euribor, the euro equivalent), has now resigned, a day before testifying before Parliament. The Bank of England and the Financial Services Authority, the two top regulators in Britain, reportedly encouraged him to go.
Mr Diamond said he was stepping down because the external pressure on the bank risked “damaging the franchise”.
BBC business editor Robert Peston said the Barclays boss was encouraged to go by the Bank of England and the FSA.
“They were unable to force him out,” our correspondent says, “because the recent FSA investigation into how Barclays attempted to rig the important Libor interest rates did not find him personally culpable.”
“However, as a regulated institution, it was impossible for Barclays’ board to ignore the revealed wishes of the two most powerful regulators in the City.”
Let’s come up with a comparison. Think about the day before Jamie Dimon testified in front of the Senate Banking Committee. Was there one second where he felt an impulse to resign? Did anyone from the Office of the Comptroller of the Currency or the Federal Reserve, and I mean anyone from the top all the way down to the mail room, think about asking him to resign? And it’s not like the Fail Whale trades are the only sketchy activity practiced by JPMorgan Chase.
In fact, we don’t have to even look to another bank for a parallel. This investigation into Barclays got started because the US Justice Department settled with the bank for a relatively small sum, $450 million (shared with UK regulators) over manipulating the Libor. The Justice Department agreed not to prosecute the bank, because they cooperated with the investigation. They “left open the possibility of prosecuting officers or employees” of the bank, as well as the other banks involved in the scandal, which basically includes all of them. But the track record is pitiful.
Getting back to Barclays and Bob Diamond for a moment, the now ex-CEO tried to blame the scandal on the regulators, who he said looked the other way at Barclays’ fixing of the Libor.
The authorities found that Barclays reduced its LIBOR submissions to protect the reputation of the bank from negative speculation during periods of acute market stress. The unwarranted speculation regarding Barclays liquidity was as a result of its LIBOR submissions being high relative to those of other banks. At the time, Barclays opinion was that those other banks’ submissions were too low given market circumstances.
To be clear, Barclays encountered no liquidity problems through 2007 and 2008. The inaccurate speculation about potential liquidity problems in the two periods noted created a real and material risk that the bank and its shareholders would suffer damage. It was, as you will recall, a period of extraordinary turbulence and uncertainty. This raised questions for the bank about the integrity of the LIBOR setting process, and various individuals within Barclays raised issues externally about that, including with the British Bankers’ Association, Financial Services Authority, Bank of England and US Federal Reserve.
The Bank of England did not take kindly to this, saying that Diamond “did not understand” that he had been instructed to not tamper with the Libor. Diamond maintains the charge, and claims that he will reveal “embarrassing details” about his dealings with the regulators at tomorrow’s hearings, if challenged.
Incidentally, Diamond could still walk away with a severance package of between £20-£30 million, showing there are still some similarities between the US and Britain’s financial systems. But that’s based on his lack of admission of guilt, which doesn’t totally square with the “Bank of England told me it was OK” alibi.
Bloomberg’s editorial board writes that “heads should roll” at other banks over the scandal. You have to put this in the proper context. The Libor governs the borrowing rates on virtually every consumer loan made, from mortgages to student loans to credit cards, to say nothing of the $700 trillion derivatives market. Artificially rigging these rates screws pretty much everyone on the planet who uses credit. It holds the largest class action potential in global history. And Barclays, as it says in the DoJ brief, didn’t act alone. Banks were apparently fighting it out to manipulate the Libor.
There are a number of scandals that “should be the scandal” to take down the financial system. Not many have the reach of this one.




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Price of oil : manipulated
price of drugs: manipulated
price of food: manipulated
price of borrowing: manipulated
stock market activity: manipulated
price of labour: manipulated
I guess I could go on.
the only thing that is not manipulated or controlled in any way, is the money made by the executives running things.
good day to be angry isn’t it?
“heads will roll” now means
… will leave the position with huge bonuses in the many millions of dollars, and probably resurface quite soon in a similar position elsewhere.
thanks dave
“…that he will reveal “embarrassing details” about his dealings with the regulators at tomorrow’s hearings, if challenged.”
Call the corporate bluff, then take his head!
Massive theft with total impunity. Holder should be forced to resign. His record at DOJ is dismal.
Geez, is that why Jefferson and Madison et als where so upset? Market manipulation by a King and his cohorts?
Yes it is a good day to reflect, get upset, then realize, you have been raped.
I’m old enough to remember when wire fraud was considered a criminal offense.
Barclays Bank CEO Bob Diamond, who initially resisted resignation over his bank’s fraudulent manipulation of the benchmark Libor inter-bank lending rate (as well as Euribor, the euro equivalent), has now resigned, a day before testifying before Parliament.
If he leaves Britain? They should cuff than stuff this POS, now before he becomes a flight risk!
Right, as usual.
All we really do now is move the criminals around. OTOH, gotta admit, things move faster in England than here.
But the question is….Is Holder doing what he wants to do or is he being given instructions, perhaps, by someone higher up the food chain?????
Gangsters used to refer to their lawyers as “mouthpieces”, ncg.
Holder is an “order-taker”, a “follower”, a mouthpiece
From bananas to the Big-Time …
He does what he is told.
Draw yer own conclusions.
(And don’t forget to loudly celebrate our deliverance from the tyrannies and despotism of King George III … tomorrow, wear the “proper” spirit and all that …)
;~DW
Anybody else remember Kleiner vs FNB Atlanta?
LIBOR became important 30 years ago, when it became obvious that the “Prime Rate” that US banks were pegging loans to was whatever the banks said it was.
Just in case anybody was under the delusion that US banks have ever been honest.
“…Diamond could still walk away with a severance package of between £20-£30 million, showing there are still some similarities between the US and Britain’s financial systems. But that’s based on his lack of admission of guilt…”
No, it’s based on his promise to keep his mouth shut.
One notes that RICO charges were not permitted in that case, Downpuppy, as the court said that nothing “criminal” occurred …
We now have, despite the passing statutes of limitation (purposely “run out”, in point of fact), quite clear evidence of bank fraud on a number of levels and in many instances.
That said, your comment is spot-on and lends a timely “perspective” to the discussion.
Jefferson (and even John Adams) would say that “this” is nothing “new”.
DW
Gotta admit, starting our own country seemed like a good idea, at the time. Worked pretty well for 200 years. Then greed kinda got outta control.
It “worked well” for some, ncg … for others, not so much.
If your skin was “red”, brown, or black, you paid the price.
Now, it works “well” for a very precious few … the rest of us … oh, well.
And a sickly “green” is the “back”, in “style” …
(“Get rich or get out!” Is now the clarion “call”.)
DW
edit
Holder, Obama, the Bush/Cheney administration, and all members of Congress who sanctioned and voted to continually finance the war crimes associated with illegal military actions since 2001 should be prosecuted. Ain’t gonna’ happen.
Did Obama ever state that the “buck stops with him”? If so, he lied. He and his administration, just like those before him, can’t spell accountability, much less take responsibility for their criminal actions, until they’re retroactively enacted as lawful by those complicit in the deeds.
This is why the “debate” between the austerity people and the debt people is ludicrous. The markets are about 99% manipulated. If you want to know how the financial system works, put a 1000 dollars on a trading site. Follow the news. And try to increase your balance. Go long and go short. Buy and sell equities, commodities, and bonds. Buy some derivatives. If you take it seriously and apply yourself, it won’t take long to see the manipulation. And eventually, you probably will lose all your money. Vegas has nothing on Wall Street and the City. Economics is irrelevant. LIBOR fixing is relevant. When you can use deriviatives to amplify the effects of small changes and you have the central banks backstopping you, the nonsense called “the field of economics” doesn’t mean diddly poop. Don’t hold your breath for Krugman to talk about LIBOR. He rarely if ever talks about fraud and rigging. He can’t pull his little authority trip once the subject turns to trillions in derivatives fraud.
That’s because the sociopaths that run this country have a different interpretation of the “Golden Rule” than the one most of us were taught to follow.
Even Al Capone voiced his awe in relation to the criminality of Wall Street and the casino stock exchange.
There will never be a banking scandal big enough to bring down one of the TBTF banks, or send a bankster CEO to jail through our so-called legal system. There does, however, remain some hope that tumbrels and guilliotines may do the job.
The statutes of fraud do not seem to be running out, as the Banksters keep committing new and exciting crimes.
With the LIBOR manipulation the Banks have screwed the 1%, all of whom are leveraged and pay interest. He’s going down, a la Madoff.
Hmm, might want to look up Kipling’s analysis of the US.
I can personally tell you the cost of the manipulation of the LIBOR to me. It is about $550 (average) per year times 20 years of remaining payments on my mortgage. That is $11,000 on my house alone.
That sick MF should be in jail.
Aye
There is plenty for all but the pathological control freaks
have difficulty sharing.