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Elite Accountability Inaction: Barclay’s CEO Refuses to Resign After Scandal

I’ve sort of missed all the hubbub surrounding Barclay’s Bank interest rate manipulation troubles. As I understand it, the bank was fined a fairly trivial amount by the CFTC and the Justice Department, compared to what they reaped in profits, on the fraudulent use of the LIBOR.

The charges revolved around Barclays’ submissions to the London InterBank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor), which are benchmark interest rates used in financial markets around the world.

Barclays is one of the financial institutions that contribute information used in the calculation of the rates, which are meant to reflect each bank’s assessment of the rates at which it could borrow unsecured interbank funds […]

According to the Justice Department, between 2005 and 2007, and at times through 2009, “certain Barclays traders requested that the Barclays Libor and Euribor submitters contribute rates that would benefit the financial positions held by those traders. The requests were made by traders in New York and London, via electronic messages, telephone conversations and in-person conversations.”

The CFTC also alleged that from late August 2007 through early 2009, senior executives directed Barclays to routinely make “artificially low Libor submissions to protect Barclays’ reputation from negative market and media perceptions concerning Barclays’ financial condition.”

Masaccio explained why the level of the fine is pathetically weak, and shows how crime does pay. I want to focus on the arrogance of Barclay’s CEO Bob Diamond, who steadfastly refuses to resign despite presiding over this systematic criminal activity. It’s another example of elites never having to take accountability for anything.

The boss of Barclays has insisted he will not resign after staff rigged the key lending rate between banks.

Bob Diamond was speaking at a meeting of analysts at US bank, Morgan Stanley.

And in a letter agreeing to give evidence to MPs, Mr Diamond condemned the inappropriate behaviour of a “small number” of employees who had tried to make profits for their own benefit.

Britain is kicking our tail in showing how you respond to things like this, with plenty of members of Parliament demanding Diamond’s resignation and criminal investigations. And yet, all Diamond has to do is say no, in Bartleby-the-Scrivener-like fashion (which also happened to be a story of Wall Street).

In this country, we don’t even get to the resignation stage. The best we can do is have a scant few call for Jamie Dimon to resign from a board at the New York Federal Reserve that regulates his bank. Actually saying that misbehavior should be met with termination is a bridge too far. But even in countries with more of a tradition of accountability, this set of elites can simply refuse. We’re talking about Barclay’s systematically rigging the interbank lending markets for their benefit. And yet nothing, at least not so far.

UPDATE: Atrios:

We lock people up for very little. When they steal massive amounts we say there’s nothing to be done. How about, uh, locking people up? That’s the kind of regulation which, you know, provides some incentives.

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David Dayen

David Dayen