Diamond Offers Regret and Blame Before Select Committee

by Stephen Moore on July 5, 2012

Former Barclay’s chief executive officer Robert Diamond told the British select committee he regretted the company’s role in the rate fixing scandal and said blame should also be passed onto other banking institutions and regulators for the LIBOR scandal.

“Clearly there were mistakes,” Mr. Diamond told the parliamentary select committee.

Though he offered regret, he told the committee he was unaware of the traders’ actions and the revelations, he said, “made me feel physically sick.”

Throughout the entire process, Diamond refused to take the blame for the scandal.

“I don’t feel personal culpability. What I do feel is a strong sense of responsibility,” Mr. Diamond said

Diamond says that Barclay’s was not the only bank manipulating the London interbank offered rate (LIBOR) and questioned how banks that were partly nationalized were borrowing at a lower rate than Barclay’s.

“If Whitehall was told ‘Barclays is at the highest of Libor’ [the London interbank offered rate], they might say to themselves ‘my goodness, they can’t fund, we need to nationalize them’, as they had nationalized other British banks,” Mr. Diamond said, using Whitehall as example. “We were desperate. We had £6.7 billion ($10.5 billion) of equity being raised. If rumors got on the market that we couldn’t fund, then maybe we wouldn’t have been able to complete the equity raising.”

Diamond also noted Barclay’s raised concerns about Libor with American and British regulators.

“I can’t sit here and say no one in the industry didn’t know about the problems with Libor,” he said. “There was an issue out there and it should have been dealt with more broadly.”

Barclay’s was the first financial institution to step forward and accept responsibility for its role in the crisis. Diamond decided to step down from his position with the company the day before his testimony and earlier this week Barclay’s chairman also announced his plans to step down.

David Cameron, Britain’s prime minister, suggested Diamond should not get any bonus or golden handshake on his way out.

“It would be completely wrong if people leaving under these circumstances were given some vast payoff,” Mr. Cameron. “It would be completely inexplicable to the public. I hope that won’t happen.”

The problems could extend past the senior management at Barclay’s; the traders based in New York and London could also face criminal charges. Diamond reserved his harshest words for the traders.

“I am sorry, angry and disappointed,” Mr. Diamond told the committee “There’s no excuse for the traders’ actions. This is wrong, and I’m not happy about it.”

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Stephen Moore is a contributing writer to the Wall Street Job Report.

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