Bloomberg reports that yes, Diamond was contrite, repeatedly condemning the conduct of the 14 traders involved. Yes, he lost his job. But not once did he let Leadsom and her fellow MPs delve into the bank’s internal operations, including its compliance process, risk-management procedures and managerial oversight to understand how Barclays staff could have falsified interest rates used to price $800 trillion in derivatives and corporate and consumer loans, with no one noticing.
Without these details, regulators and lawmakers will remain at sea over how to prevent such behavior at Barclays (BARC) and the dozen or so other banks about to get pulled into the dragnet. Now that U.K. lawmakers have voted to conduct a parliamentary probe, here’s what they should ask Diamond:
'Where were the controls ?' In four short words, the MPs should have demanded to know why various checks and balances, which all banks must have, failed at every level. How could bankers and traders, for almost five years, get away with rigging Libor submissions to make sure their derivative bets would pay off ? As Diamond would have us believe, knowledge of the rate-fixing never went beyond trading desk supervisors. If that’s true, it reveals a lack of internal controls that borders on malfeasance.
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