A top Barclays executive who quit over the bank’s rigging scandal told British lawmakers Monday that he was instructed by his former boss Bob Diamond to manipulate key inter-bank lending rates.
Jerry del Missier resigned two weeks ago over the scandal, which has also claimed the jobs of Diamond and Barclays chairman Marcus Agius and rocked the City of London, one of the world’s top financial hubs.
It had emerged that del Missier told Barclays traders to manipulate the bank’s submissions for the Libor and Euribor rates in a bid to make it seem as if other banks were more willing to lend to Barclays than they actually were.
Diamond has said that del Missier did this after “misinterpreting” a phone conversation between Diamond and Bank of England (BoE) deputy governor Paul Tucker in October 2008.
But asked by the British parliament’s Treasury Select Committee on Monday whether the phone call was “an instruction” from Diamond to cut the submissions, del Missier replied: “Yes, it was.”
Diamond, who stepped down as Barclays chief executive hours before del Missier on July 3, previously told the committee he had not instructed del Missier to manipulate the rates.
In other words, Jerry Del Missier knows where the bodies are buried, because he was the guy with the shovel. He says he was acting under CEO Bob Diamond's orders at the time. You're mad if you think that Barclays wasn't the only bank to shave points like this too. they had every incentive to do so.
The Libor scandal basically works like bidding on valuables on one of those online auction sites. Everyone names their price and they go from there, but if you knew ahead of time what the price was going to be by hacking the site, you could make your bid higher or lower to benefit yourself and then lie to everyone else about what your bid was, then pocket the difference.
You could say you bid $100 for that pair of shoes or whatever, actually pay $80, keep the $20 for yourself and nobody's the wiser. The guy on the other end of that sale got stiffed $20 and he didn't know any better, too. Barclays did the same thing only they skimmed a bit off the top of the daily Libor trade every day. It added up to big, big money, and you and me were the guys getting stiffed.
And keep in mind Barclays' crime was getting caught. The other banks? I'm betting they did it too. In fact all of us too that particular bet, and we lost billions playing. That's the problem. The purveyors of free market economics say we need less regulation in order to unleash the power of capitalism, and every time we do capitalism comes along and makes it a sucker bet in a rigged carnival game. Libor is just another game rigged by the house so that the players always lose.
And as bad as the Dems are on this subject, always remember the Republicans want even more of that.