The Treasury Select Committee met with the former chief executive of Barclays, Bob Diamond, today to question him about the penalties levied against the company in connection with the Libor scandal.
Barclays was one of the first banks to own up to their involvement, says chairman of the treasury select committee, Andrew Tyrie MP.
Read: Barclays to pay $400 million+ to settle charges
The UK and the US have filed charges following an investigation into the submission of various interbank offered rates.
As seen on the UK parliament website, Tyrie said about the meeting:
“The Libor interest rate benchmark—crucial to transactions right across the economy and affecting millions of people—was systematically rigged over a period of years.
It appears that many banks were involved and Barclays was the first to own up to their part.
This is the most damaging scam I can recall. The reputation of Britain’s financial services industry has been severely tarnished.
The public’s trust in banks has been even further eroded, and restoring the reputational damage must begin immediately.
Parliament and the public need to know what went wrong and whether the perpetrators have been rooted out. We also need to be given confidence that this has been put right.”
Watch the meeting.
Some quotes from the meeting, as reported by The Telegraph:
14.12 Andrew Tyrie hopes Diamond “can speak freely, more so now you have resigned”.
Read: Barclays CEO resigns
14.16 Diamond: “I worry the world looks at Barclays through a few group of traders who had reprehensible behaviour. That’s not representative of the Barclays I know. There were mistakes, behaviour that was reprehensible. It has been three years with three regulatory agencies looking at millions of files, applauding Barclays for its co-operation. History will judge Barclays as an incredible institution because of its people.”
14.18 Diamond: “Support from shareholders and regulators hadn’t been as strong as it had been and I decided to step down. Don’t know if regulators called (chairman) Marcus Agius [to ask me to resign]. I did not discuss that with him.
14.20 Diamond: “Unfortunate series of events in the past week around Barclays being identified as first bank in a report that clearly showed very bad behaviour by a group of people. We dealt with that appropriately but that’s not coming out… I went through interviews with FSA and very strong support. I know nothing [about FSA questioning corporate governance when I was appointed].
14.23 Diamond: “Every year the FSA comes to Barclays, the focus and control at the top was something they were happy with. I don’t recall [they said trust had broken down]. We had an overall discussion about culture. They were specifically pleased about the tone at the top.”
14.56 Diamond: “It took the credit crisis to explode one bank’s [Libor] rates and another bank’s rates. I was not aware [that my employees were having this Libor argument].”
14.59 Diamond: “Soon after credit crisis, early 2009, there were requests from CFTC to investigate [Libor]. I wasn’t aware of Libor manipulation in October 2008. I found out this month. Reports that came to me were not relative Libor ratings [to other banks].” [What did you say to del Missier after you sent memo?] “I had a conversation [with del Missier] about content of note but was unaware that he thought it was an instruction and that he did instruct.”
16.15 Diamond: “It wasn’t investment banking that was causing the issue [because other banks failed]. It was bad culture. We had bad performance and those people have gone. It could happen in a retail bank. We need strong controls.
16.23 Diamond told founding principles of Barclays were “honesty, integrity, plain dealing”. Diamond: “That is how I have behaved throughout my whole career.”
16.27 [TSC: You seem to have seen nothing, heard nothing, know nothing. You’re in charge and you’re not even asking questions internally and people who are acting criminally are not coming to you. You must be grossly incompetent if you were not complicit]. Diamond: “Behaviour was wrong. It’s hard to give another answer.”
16.30 Diamond: “I accept responsibility and responsibility for the changes made. I take the full results of investigation as being on my watch.”
16.34 Diamond: “I would know summary of legal issues that go to board. Not sure of number of legal cases concerning interest rate swaps.” [Diamond now defending Barclays over accusations that interest rate swaps were mishandled]
16.46 Diamond: “[Libor rigging] became a much bigger concern during financial crisis because banks were having trouble lending to each other. [TSC: Barclays noticed other banks were doing this but Barclays didn’t notice it internally]. Diamond: “It was wrong, it was abhorrent. But that was a different issue. [Bringing Libor down] was to get in the pack not to manipulate rates.”
16.56 Diamond told Bloomberg article cited Libor manipulation five months before Tucker phone call. Diamond: “We were high [on Libor rate] because we were reporting where we were borrowing money. I’m not excusing that behaviour. But the committee has to step back and look at the financial crisis, and look at the actions of Barclays when we found out. I applaud the Chancellor who is going to make the investigation on Libor more broad.”
Diamond: “[There was] no expense spared in taking firm action. Difficult for Barclays to be isolated on this. I know if an incident happens again, Barclays will be the first to come out and deal with it. I look forward to the continued investigations around Libor. If there is anything Barclays can do, then I know that they will.”