Bank of England governor refuses to back Bob Diamond

http://www.guardian.co.uk/business/2012/ju...g?newsfeed=true

 

Sir Mervyn King, governor of the Bank of England, has refused to say Bob Diamond is a "fit and proper" person to run Barclays in a hard-hitting attack on the City culture that allowed banks to deceive customers and give excessive rewards to traders.

 

"There's something very wrong with the UK banking industry and we need to put it right," King said at a press conference on Friday to mark the publication of Threadneedle Street's Financial Stability Report.

 

Asked twice whether Diamond was "fit and proper" to run Barclays in the wake of revelations that the bank manipulated interest rates used as the benchmark for borrowing costs for UK households and businesses, both King and Lord Turner, chairman of the Financial Services Authority, declined to answer.

 

King made his unhappiness with the City clear but said there was no need for a Leveson-style inquiry into banks. "It is time to do something about the banking system", the governor said. "Many people in the banking industry are hard-working and feel badly let down by some of their colleagues and leaders.

 

"It goes to the culture and the structure of banks – the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today news of yet another mis-selling scandal."

 

Barclays was on Wednesday fined a record £290m for attempting to manipulate crucial interest rates known as the London interbank offered rate (Libor) and the Euro interbank offered rate (Euribor) between 2005 and 2009. On Friday the bank was among four banks implicated in interest swap misselling to small businesses.

King added that the question of who ran the UK banks was a question for another day, insisting that the immediate priority was for the government to implement in full the recommendations of the Independent Commission on Banking headed by Sir John Vickers, which called for firewalls to be set up between the investment and retail arms of banks. The governor said the cultures of investment and retail banking were completely different and needed to be separated.

 

Turner said that there was a "culture of cynicism and greed that is quite shocking." Although the FSA chairman refused to call for heads to roll at Barclays, he said of the City: "There are some very wide cultural issues that need to be addressed....“banks have learned throughout this process "

 

Andrew Bailey, the top banking regulator at the FSA, said the onus was on bank boards to take action. "If, as we now see, there is a fundamental breakdown in trust, the bank boards have to recognise that trust has to be got back and they have to think very hard about how they do that."

 

The latest scandals to engulf the banking industry came at a time when the Bank said the outlook for financial stability had deteriorated as a result of the deepening crisis in the eurozone.

 

King said this had "generated a great deal of uncertainty around the economic outlook and exposed severe vulnerabilities in the European banking system".

 

The governor said UK banks were being urged to hold more capital than required under new international standards just in case the situation in Europe worsened, and should build up the cushion by limiting dividends to shareholders and compensation to staff.

 

"It is crucial the banks' efforts to improve resilience should not come at a high cost to the real economy", King said. "Alongside capital-raising, banks can improve their resilience by reducing the riskiness of their balance sheets, and by bolstering investor confidence, for example by seeking to reduce the degree of uncertainty around the possible impact of the euro-area crisis on their balance sheets."

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Folks, let's remember here that Bob Diamond said, and I quote, “There was a period for remorse of banks but I think this period is over.....The question for us is how do we put some of the blame game behind us...banks have learned throughout this process ."

 

Uh-huh.....Riiiiiiiiiight..... Diamond said this to a parliamentary inquiry in early 2011. He kind of neglected to mention the fact that Barclays had been engaging in the manipulation of LIBOR rates and frankly those words can now quite easily be interpreted as an attempt to try and misdirect and divert attention away from the covering up of gross misconduct and negligence..

 

So, is Diamond "fool or knave"...? That is the question, he either deliberately misled parliament or he had no idea what was going on under his watch... More "willful blindness" on the part of a CEO...? Either way, Diamond's position is surely untenable and he has to go...

 

King's comments are also curious, he doesn't feel that a Leveson-style inquiry is necessary... Is he joking..? That is precisely what is required, the excuse he uses that "many people in the banking industry are hard working..." is pathetic frankly, because many people in the banking industry are also dishonest, unethical bast*rds who should be arrested and put in prison, and I'm sure many people at the News of the World were also honest and hard-working as well..

 

In the 1980s during the Savings and Loan crisis, there was no escape for crooked bankers, the Reagan Admin and the SECC arrested and jailed hundreds of bankers, this LIBOR scandal is far, FAR bigger than S&L or even BCCI or Barings, it goes right to the heart of how much ordinary people pay in interest on their mortgages... This is A VERY BIG DEAL as it can affect potentially millions of people, ordinary families, not just here, but in the US, Europe, even Asia...

 

We need an inquiry, we need to see some transparency and we definitely need to see a separation of Investment and Retail banking sectors.....

Diamond has laso claimed that just a few members of staff were involved. Haven't we heard that somewhere before? :unsure:

 

Hugo Rifkind (journalist son of former Tory minister Malcolm) has suggested that lay-persons shouldn't comment because we don't understand all the details. Well, Mr Rifkind, I think we can all understand that when an organisation is fined nearly 300 million quid then something has gone seriously wrong. We can understand that Barclays profits (used to justify Diamond's mind-boggling bonuses over the last few years) have been inflated by these dodgy deals. So, Mr Diamond, it is time to hand in your staff security pass and get your cheque book out to repay those bonuses. Oh, and when you've done that, perhaps you can find the time to make an appointment with the fraud squad.

With all of this coming out it does at least seem like we might finally be getting to the point where something long-term is actually done about the banking mess. The Leveson comparison is a good one as it shows that in comparison to phone hacking in the media there's been a complete failure to hold the banks to account for everything that happened.

Diamond has laso claimed that just a few members of staff were involved. Haven't we heard that somewhere before? :unsure:

 

Hug o Rifkind (journalist son of former Tory minister Malcolm) has suggested that lay-persons shouldn't comment because we don't understand all the details. Well, Mr Rifkind, I think we can all understand that when an organisation is fined nearly 300 million quid then something has gone seriously wrong. We can understand that Barclays profits (used to justify Diamond's mind-boggling bonuses over the last few years) have been inflated by these dodgy deals. So, Mr Diamond, it is time to hand in your staff security pass and get your cheque book out to repay those bonuses. Oh, and when you've done that, perhaps you can find the time to make an appointment with the fraud squad.

 

Hugo Rifkind can just f**k right off.. one doesn't have to be an expert in nuclear fusion to know that a nuclear war is a bad idea, similar principle here, one just kind of instinctively knows that manipulating interest figures is similarly a bad idea and that Financial Terrorism is as damaging as a bomb going off and that it has far reaching implications.. I'm sick of arrogant, smug apologists who say that we can't possibly understand what it is that people like Jamie Dimon and Bob Diamond do, because they're such f**king geniuses, so we should let them get on with commiting fraud and f**king up the economies of sovereign nations and allow them to collect massive bonuses for doing so at the tax-payers' expense... Max Keiser is right as far as I'm concerned - "indignation then decapitation...."

There are rumours that some senior Tories are going to be accused in tomorrow's Independent of being involved in this although it could be with a bank other than Barclays. I know who I suspect but I can't afford to be sued so I won't name him. OL

There are rumours that some senior Tories are going to be accused in tomorrow's Independent of being involved in this although it could be with a bank other than Barclays. I know who I suspect but I can't afford to be sued so I won't name him. OL

 

Could it be a person within the Tories who enjoys to eat?

OL.

Well, well, well... Looks like "Barclays Bob" has actually quit... Although, I do wonder whether or not he should have been allowed to, I rather think he should have been sacked by the shareholders...

 

http://www.bbc.co.uk/news/business-18685040

 

Barclays boss Bob Diamond resigns amid Libor scandal

 

Barclays chief executive Bob Diamond has resigned a week after the bank was fined a record amount for trying to manipulate inter-bank lending rates.

 

BBC business editor Robert Peston said he was encouraged to go by the heads of the Bank of England and the FSA.

 

Mr Diamond said he was stepping down because the external pressure on the bank risked "damaging the franchise".

 

Chief operating officer Jerry del Missier has also resigned, the third top executive in two days to do so.

 

Barclays chairman Marcus Agius, who had announced his own resignation on Monday, will now take over the running of Barclays until a new chief executive is appointed.

 

BBC business editor Robert Peston said the heads of the City's two main regulators had been unable to force Mr Diamond out "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."

 

Earlier, Lord Turner, the chairman of the Financial Services Authority, described the outrage that has built up over the bank's actions.

 

•27 June: Barclays fined £290m by US and UK regulators for attempting to manipulate Libor rates

 

•28 June: Barclays shares plunge 15%

 

•29 June: Bank of England governor calls for change in banking culture

 

•1 July: It emerges that RBS has sacked four traders over Libor and there are calls for changes in the law to cover Libor-rigging

 

•2 July: Barclays chairman Marcus Agius resigns and the government launches two inquiries into Libor and banking standards

 

•3 July: Barclays chief executive Bob Diamond resigns

 

Mr Diamond will still appear before MPs on the Treasury Committee on Wednesday to answer questions about the Libor affair.

 

"I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question," Mr Diamond said in a statement.

 

He is expected to be questioned about a conversation he had with the deputy governor of the Bank of England, Paul Tucker, about Barclays' Libor submissions at the height of the credit crunch in 2008.

 

Barclays' managers came to believe, after the conversation between Mr Diamond and Mr Tucker, that the Bank of England had sanctioned them to lie about what they were paying to borrow when providing data to the committees that set the Libor rate.

Inquiry row

 

"It is the right decision for the country," Mr Osborne said, saying the UK needed a strong Barclays concentrating on lending and contributing to economic recovery.

 

Labour leader Ed Miliband said it was "necessary and right" that Bob Diamond stepped down.

 

"But this is about much more than one individual, it's about the culture and practices of the banking industry," he said.

 

"That's why we need a full, judge-led, independent inquiry, to get to the bottom of those practices and make recommendations for change in the future. We've had missed opportunities before, we've got to seize this moment."

 

Labour is critical of the government's decision to call a parliamentary inquiry, chaired by the head of the Treasury Committee, Andrew Tyrie MP, rather than a full Leveson-style inquiry, independent of politicians.

Big pay-off?

 

Last week, regulators in the US and UK fined Barclays £290m ($450m) for attempting to rig Libor and Euribor, the interest rates at which banks lend to each other, which underpin trillions of pounds worth of financial transactions.

 

Staff did this over a number of years, trying to raise them for profit and then, during the financial crisis, lowering them to hide the level to which Barclays was under financial stress.

 

Mr Diamond is one of the UK's highest paid chief executives, earning £20m last year, and was described as "the unacceptable face" of banking by the then business secretary Lord Mandelson in 2010.

 

The details of any severance package are not yet known, but former City minister Lord Myners suggests it could add up to £20m-£30m.

 

"I think his resignation letter is drafted with an eye to that [pay-off], because he admits no guilt on his part at all," the Labour peer told BBC News.

 

"The shareholders of Barclays will be expecting the board to ensure that not a penny more is paid to Bob Diamond than that to which he is legally entitled," he said.

 

US-born Mr Diamond was head of Barclays Capital, its investment bank division, when its staff were trying to manipulate the key inter-bank rates.

 

"He maintains that he didn't know what was going on," says Robert Peston.

 

Investigations are continuing in the UK and the US into other banks over Libor fixing, including criminal investigations by the Department of Justice. The Serious Fraud Office in the UK is looking into possible criminal prosecutions.

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Actually, one of the things that amused me was that as soon as "Blood" Diamond announced his resignation Barclays shares recovered 3% of their value..... Just goes to show really that all this rubbish that apologists talk about how these "geniuses" (read "parasites") such as Diamond and other over-paid Banksters are so "vital" to the markets, the banking industry and to the economy is just complete nonsense. The Markets would probably do better and recover more quickly if we got rid of the whole sodding lot of them....

 

Of course, now that Mr Diamond is no longer gainfully employed, can we perhaps look into initiating deportation procedures back to the US...?

 

Wait till they charge him with a crime and make him serve jail time here before shipping him in handcuffs to the US to serve jail time there.

Wait till they charge him with a crime and make him serve jail time here before shipping him in handcuffs to the US to serve jail time there.

 

Dude, here or there, it would be a novelty to see ANY banker serving ANY jail time for this fiasco......

 

Diamond has claimed in evidence to the Treasury select committee that he didn't know about the LIBOR rate-fixing until a month ago. That is impossible to believe. The Financial Services Authority will have been investigating this for months and will have been questioning Barclays staff, including some very senior staff. Are we really expected to believe that the Chief Executive knew nothing of this?

 

I was once working for a company that was fined by the FSA's predecessor. Because I was working on a project linked to the investigation I knew about it nearly two years before the news became public. For part of that time we were producing weekly reports for the board.

 

Diamond doesn't seem to have been challenged on his assertion that he didn't know anything until a month ago. That's another reason why there should be a judicial inquiry with the questions being asked by a QC, i.e. someone trained to do the job. The argument that it will take too long is nonsense. The Hutton report (whatever you think of its conclusions) was published roughly six months after the death of David Kelly.

Diamond has claimed in evidence to the Treasury select committee that he didn't know about the LIBOR rate-fixing until a month ago. That is impossible to believe. The Financial Services Authority will have been investigating this for months and will have been questioning Barclays staff, including some very senior staff. Are we really expected to believe that the Chief Executive knew nothing of this?

 

I was once working for a company that was fined by the FSA's predecessor. Because I was working on a project linked to the investigation I knew about it nearly two years before the news became public. For part of that time we were producing weekly reports for the board.

 

Diamond doesn't seem to have been challenged on his assertion that he didn't know anything until a month ago. That's another reason why there should be a judicial inquiry with the questions being asked by a QC, i.e. someone trained to do the job. The argument that it will take too long is nonsense. The Hutton report (whatever you think of its conclusions) was published roughly six months after the death of David Kelly.

 

Well, that's an outright lie right there... No way he didn't know...

 

TBH, there is no way you can trust politicians to come up with the answers to this, they're too in awe of the banking industry, and not just the Tories, New Labour were every bit as bad and let the likes of Fred Goodwin get away with murder...

 

I think it's high time we started taking the Max Keiser approach to these Fraudsters and Speculators..... In fact, Keiser should be in charge of an investigation of the banking industry....