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Barclays Libor Scandal: When Did Manipulation Start?

Posted by Larry Doyle on July 4, 2012 9:52 AM |

Discretion would typically dictate my writing about our nation’s declaration of independence today.

I will address that in short order, but the ongoing scandal surrounding the Libor price-fixing is not taking a holiday today. All eyes and ears in the UK are focused on the parliamentary testimony of recently deposed Barclays CEO Bob Diamond.

Diamond and his former lieutenants at Barclays have already indicated that their defense will zero in on the Bank of England and specifically the BOE’s Paul Tucker. 

I would think Diamond, other Barclays’ executives, central bankers at the BOE and Tucker himself might like to reduce their exchanges — and what was understood within those exchanges — to a simple misunderstanding or misinterpretation. Wouldn’t that be convenient for all these heavyweights?

Not so fast.

The exchange between Tucker and other BOE representatives with Diamond and other Barclays’ executives deserves a full and thorough hearing. I believe we will only get to the bottom of that interaction and similar exchanges between senior bank executives and central banking counterparts on this side of the pond via an independent investigation.

That said, the Barclays’ defense of pointing the finger at central bankers is misleading. How so? The real question needing a full and thorough investigation and expose is none other than the following: When did this Libor price-fixing scandal start?

Details released to this point indicate Libor being rigged as early as 2005. Markets were not stressed at that point in time so there is no reason to believe central bankers would be complicit in this scandal at that period.

Will Bob Diamond’s testimony provide any answers as to when this manipulation started? I doubt it, although I am hopeful that members of the committee questioning Diamond will aggressively address this line of questioning. The answer to that inquiry is critically important.

If trust on Wall Street and in The City is to be rebuilt, it will only happen if and only if the truth of the start date to this scandal is determined. I think that information can only be revealed under the direction of an independent investigator with the ability to subpoena.

Some may think I am overly harsh and others too deferential, but I firmly believe the threat of a perjury charge and subsequent trial is a necessary condition to expose when this scandal really started. From there, real accountability might be determined and adjudicated appropriately.

Then and only then might trust be rebuilt in our financial markets.

What do others think?

Larry Doyle

Related Sense on Cents Commentary
Barclays Libor Scandal: Reports Regulators Knew; Time for Independent Investigation and Eliot Spitzer
Barclays Libor Scandal: How Big Will This Get?
Barclays Libor Scandal: Reports Regulators Knew; Time for Independent Investigation and Eliot Spitzer
Barclays Libor “Price Fixing”: Collusion Is Illegal. . .

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Bill

    On another scandal, things have been real quiet lately as to MF Global and it’s former genius CEO, John Corzine.

  • phil

    Just how corrupt are these guys and this industry. Are we dealing with organized crime here. By here I mean commercial/investment banking, the financial industry, hedge funds, the exchanges. What is the deal? Would appreciate answers from true insiders.

  • LD


    There are certainly elements and segments of the industry that are seriously challenged in terms of ethical dealings. In fact, a case of corruption is not difficult to make. That said, I maintain that the overwhelming percentage of people in the industry are very good and upstanding professionals and citizens.

    Where do the problems lie? Management has captured the regulators which has allowed a culture of bad behavior to develop and persist.

    Self-regulation does not work. The conflicts of interest are too great. The regulators cannot both serve the banks who fund them and the investors whom they are charged to protect.

    I have written extensively of the corrosive and destructive nature of this Wall Street-Washington Incest.

  • Ron Larson

    Has anyone in the UK been prosecuted for financial crimes recently? Or are they as bad as the US when is comes to holding their “masters of the universe” accountable for their blatant crimes?

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