Sarah Gardner: Let’s start with the story of an American banker testifying before lawmakers about a financial scandal. Hard-charging, sure of himself, but wisely, contrite.
And no, I’m not talking about JPMorgan CEO Jamie Dimon last month. This is Bob Diamond, the American exec who recently resigned as CEO of Barclays, the banking powerhouse based in Britain. Diamond testified before a committee of the British parliament today about charges Barclays manipulated a key interest rate called the LIBOR. The bank’s already been fined over $450 million.
And as Marketplace’s Stephen Beard tells us, that’s just the beginning of the fallout.
Stephen Beard: Sparks were supposed to fly. Bob Diamond, we were told, is a hard as his mineral namesake. And he was furious, having been turfed out his job as one of Britain’s top bankers.
But in today’s hearing, he came across as rather meek. He he actually apologized for the LIBOR interest rate rigging by what he said was a small number of Barclays staff.
Bob Diamond: That behavior was reprehensible, it was wrong, I’m sorry. I’m disappointed. And I’m also angry.
Though it’s not quite as angry as some of the politicians grilling him today.
Politician: You must have been grossly incompetent in your job during that period of time if you weren’t complicit in this.
Water off a banker’s back. He may have emerged largely unscathed from the hearing, but his former bank might not be so lucky. Barclays and some of the other 15 banks involved in the LIBOR system now face multi-billion-dollar lawsuits in the United States. Anyone whose loan or investment was pegged to LIBOR could claim they lost out from the banks’ dishonesty.
Hedge fund manager Manal Mehta.
Manal Mehta: It is virtually impossible to decipher the true scale and scope of this liability, because the numbers are just so atsronomically large.
But William Black, a banking expert from the University of Missouri, Kansas City, believes that some on Wall Street will be crowing over the LIBOR scandal. It’s one in the eye for the old rival London.
William Black: LIBOR was the crown jewel of what the Brits had going for them in the City of London. It was their thing and it was immensely valuable to them, and they’ve taken that crown jewel and completely spoiled it and they’ve done so out of pure greed.
The crown jewel has certainly lost a Diamond. In spite of his smooth performance, Bob is thought unlikely to land another major banking job, at least on this side of the pond. But he does have a banker-type payoff to console him, which today he declined to forgo — a reputed $48 million.
In London, I’m Stephen Beard for Marketplace.
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