BOB Diamond arrived at the Treasury Select Committee on a mission to rescue his reputation after being forced into resigning as chief executive of Barclays.
He succeeded only in confirming that there are many more questions to answer.
Having fired a shot over the bows of the Bank of England (and the politicians) by releasing a note apparently implicating the bank's deputy governor in Libor submissions on the eve of his appearance, Mr Diamond was eager to tell the MPs, repeatedly, how much he loved Barclays and how reprehensible were the traders who had falsified submissions that determine the interbank lending rates.
Hopes were high that the committee's grilling would provoke explosive revelations from Mr Diamond in relation to the Bank of England apparently encouraging Barclays to reduce their lending rate. Mr Diamond said that he had not regarded this as an instruction and, although his chief operating officer had done so, this was the result of a misunderstanding and a mis-communication with Mr Diamond. As for a reference to people in Whitehall who were concerned Barclays' rate was out of step with that of other banks, he did not know whether these were ministers or officials.
Mr Diamond's repeated response that the actions of the 14 traders did not reflect the culture of the bank will do nothing to reassure the public. It emerged from the questioning that there was a failure to report these falsifications to supervisors or compliance officers despite it being very clearly against the compliance code.
That he only knew the extent of what happened a few days before the FSA published the findings of its investigation and announced the fine last week does not exculpate him. It seems all too likely that, as he said, the wrong-doing was not reported beyond desk supervisor level because the culture over which he presided was one where profit trumped principle. His response to the suggestion that he should forego a pay-off, that it was a matter for the board, did nothing to dispel that.
The select committee failed to discover who knew what and when. Nevertheless a parliamentary rather than judicial inquiry is likely to be the swiftest course to restoring trust in the banking system in Britain. The Government has given its approval to the Vickers Report recommendation of building a firewall between retail and investment parts of banks. Mr Diamond's protestations yesterday that, once the wrongdoing was discovered traders were sacked or suspended pending investigation, served only to confirm that the aggressive, risk-taking culture of the "casino" part of banks is the dominant one.
A new culture is required. One of the most telling moments came when Mr Diamond was unable to name the three principles on which Barclays had been founded: honesty, integrity and plain dealing. His silence proved more eloquent than his claim that reading the incriminating emails from Barclays traders made him physically sick. It should be a reminder to politicians that the forthcoming Financial Services Bill and Banking Reform Bill, in toughening regulation, must be a return to first principles.
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