Barclays Bank CEO Quits In Wake of Interest Rate Fixing Scandal

by The Associated Press Jul 3rd 2012 9:36AM
Updated Jul 3rd 2012 11:46AM
Bob DiamondBy GREGORY KATZ

LONDON -- He was a poster boy for corporate arrogance, telling Parliament last year that the time for bankers to apologize had passed.

Now Bob Diamond is just the latest victim of growing public anger at a British establishment they regard as greedy and ethically challenged. Bankers, politicians and journalists have all felt the full force of the growing disdain at a time of economic troubles.

The hard-driving CEO of Barclays bank resigned Tuesday, buckling under massive media pressure and a few none-too-subtle hints from top politicians that his days at the top should be numbered.

In the few short days since Barclays was fined $453 million for its role in the LIBOR interest rate fixing scandal, Diamond, an American with a stratospheric pay package, came to symbolize everything wrong with international banking.

"He became a public enemy," said George Jones, professor emeritus of government at the London School of Economics. "I think the media likes to have personalities they can make into villains. The public can understand that. They can't understand all this talk about LIBOR rates, but they know it was underhanded and the bankers made money."

Diamond has been in the limelight before. Two years ago in response to a furor over bankers' pay, Peter Mandelson, a senior government minister under the previous Labour government, branded Diamond "the unacceptable face of banking."

And earlier this year, he felt the heat from shareholders, with 27% of shares voting against his pay package. Diamond soothed the anger somewhat by agreeing to make half his bonus contingent on meeting performance targets.

Diamond is not the first prominent, wealthy banker to infuriate Britons since the financial crisis started five years ago. And he has the comfort of not being the most reviled -- that dishonor falls to Fred "The Shred" Goodman, the CEO who led Royal Bank of Scotland to near-ruin and an eventual taxpayer-bailout after it outbid Barclays to take over Dutch bank ABN Amro.

Goodman resigned, taking away $25 million in pension benefits. In January, following another public outcry, the government stripped Goodman of his knighthood.

Diamond's resignation comes just a day after Barclays Chairman Marcus Agius announced his intention to resign Monday. Though Agius said the buck stopped with him, there was no let up in demands for Diamond to quit too. He was after all the man in charge at the investment banking division at the heart of the scandal at the time.

Diamond leaves Barclays a bigger beast than before -- he led Barclays in scooping up the remains of Lehman Brothers' U.S. operations at a bargain price of $1.35 billion in 2008.

However, he leaves a bank very different in nature.

Bob Diamond

"I thought he was a swashbuckling entrepreneurial character, self-made," said Allister Heath,
editor of the daily financial newspaper City AM. "He's American, a workaholic, wants to win, wants to become rich. Not ashamed of money. Barclays has been rebuilt in his image."

Barclays officials said Desmond earned about $10 million in 2011, calling BBC reports that he was paid about $32.8 million greatly exaggerated.

Last year, with Britain's economy still struggling in the aftermath of a global banking crisis, Diamond told a Parliamentary committee: "There was a period of remorse and apology for banks. I think that period is over."

The attitude toward bankers, including Diamond, was summed up Tuesday in a large-type Guardian newspaper headline: "Ever Get the Feeling You've Been Cheated?" it read.


Robert Edward Diamond Jr., always known as Bob, is a native of Concord, Mass., one of nine children. He joined Barclays in 1996, and eight years later he was put in charge of Barclays Capital, the investment banking unit.

Diamond, 60, prospered while other bank executives were losing their jobs in the industry crisis of 2007 and 2008.

He said Tuesday he was stepping down to protect Barclays from further damage.

Martin Taylor, who was CEO of Barclays between 1995 and 1998, said last week that he didn't believe Diamond had approved any wrongdoing in the bank, but that he had led a culture prone to risk.

"Bob runs an extraordinarily competitive and aggressive ship, and that is one reason why Barclays Capital has been very successful in the first decade of the century," said Taylor, who credited Diamond with a strong following inside Barclays.

"And I think that when people are pushed to go to the limit, you know what traders are like, they sometimes go beyond it. They don't need to have an instruction from headquarters to go beyond it; they think it is what the bank might expect."



____

Associated Press writers Robert Barr and Meera Selva contributed to this report.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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16 Comments

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bestrealestate88

All this hoopla and outrage over rigging the LiBor 5 or 10 basis points is really missing the elephant in the room.  The "Prime Rate" is really much more relevant to the U.S.  during the past 50 years.  Until more recently the Libor is not even in the picture in U.S. consumer credit. Most credit cards and consumer loans are/were more tied to the "prime rate" which was defined as the "the rate the banks charged to the banks' most credit worthy customers, such as the AAA companies".  Since the late 1980's the banks have been systematically rigging the prime rate by gradually increasing it over time so that it is now almost 300 basis points (3%) over the real "prime rate", i.e., what the banks really charged AAA companies such as Exxon and Johnson and Johnson.  This is the banks way of picking everyone's pocket without permission to the extend of billions and billions of dollars every year.  It is the biggest fraud in America.

Our government and the Federal Reserve actually are part of this scheme in that they redefined the definition of "Prime Rate" in the official publications rather than stopping the banks from doing this. You can check this out just by looking at the old publications from the Federal Reserve Interest Rate Series vs. the current ones.

Even attempts to correct this thru the legal system has been unsuccessful as the banks seem to have influence over the courts also (see Lum vs. Bank of America, et al).  If nothing else, the banks can outspend any legal challenger.

July 09 2012 at 4:10 PM Report abuse rate up rate down Reply
DRILLER

WAIT.
Till you see what deregulation of banks and derivatives, Is doing in THIS country, right now England and the rest of Europe are the primary news. the news corporations come here soon, and DEMOCRAT or REPUBLICAN, you are going to see some heads roll, when they start disclosing the shenanigans that have gone on in the last 12 years, since Glass-Steagal was repealed.

July 04 2012 at 3:43 PM Report abuse rate up rate down Reply
smith65791

You think it's alright for the central banks to fix rates that are artifically too low? Where savers get punished and are pushed into equities to hopefully stay ahead of inflation. Idiots.

July 04 2012 at 9:35 AM Report abuse rate up rate down Reply
n5monthsocrapleft

WE WILL NOT GIVE UP THE FIGHT UNTILL WE ENACT OUT AMERICAN ARIZONA LAW IN "ALL" 50 STATES N ABOLISH THIS MUSLIM CLOWN UNCONSTITUTIONAL WELFARE "HELL" CARE N REMOVE THIS OUT OF CONTROL SPENDING INEXPERIENCED ,MUSLIM CLOWN OUT OF OUR WHITE HOUSE IN HANDCUFFS. ! !

July 04 2012 at 9:30 AM Report abuse +2 rate up rate down Reply
1 reply to n5monthsocrapleft's comment
Somey

You really are funny farm material.

July 04 2012 at 10:53 AM Report abuse rate up rate down Reply
Somey

"led a culture prone to risk."
What a joke

July 04 2012 at 7:26 AM Report abuse +1 rate up rate down Reply
NKS55S

Totaly disgacefull what so called human beings are doing to one another in the name of greed. This is what they learned in their colleges and universatiys is to scw their fellow man / woman hope their familys are so so proud of these theives.

July 04 2012 at 12:10 AM Report abuse rate up rate down Reply
Nick Wessels

As Usual no one is held accountable and life goes on for the corrupt, cheating ********. I agree about Pelosi, she has not done one thing for the American people but every time she can she uses tax payer dollars to finance her needs. She is a worthless excuse for a human being.

July 03 2012 at 11:14 PM Report abuse +1 rate up rate down Reply
n5monthsocrapleft

IT WILL BE A GREAT DAY IN AMERICAN WHEN ,THIS MUSLIM CLOWN , CORZINE , N NAZI PIGLOSI ALL GET LOCK UP . !~

July 03 2012 at 9:41 PM Report abuse +1 rate up rate down Reply
greatqb44

still nothing about the 49.7....and i doubt anything bout fridays numbers..if they are bad...of course if they are good it will be headline all day

July 03 2012 at 8:58 PM Report abuse -1 rate up rate down Reply
jjr526

Almost brings a tear to ones eye huh.

July 03 2012 at 7:16 PM Report abuse +1 rate up rate down Reply