Roll up, roll up: see Bob Diamond drop a bombshell

Jul 3, 2012
Linda Palermo

Freed from any responsibility to Barclays, will former CEO drag the Bank of England deeper into the scandal?

BEFORE this morning's news about the resignation of Bob Diamond rendered all today's newspaper front pages null and void, one of the most intriguing stories about the Barclays scandal came from the Financial Times, under the headline: 'Barclays chief threatens to hit back'.

According to the FT, Diamond was "threatening to reveal potentially embarrassing details about Barclays' dealings with regulators if he comes under fire at a parliamentary hearing on Wednesday over the Libor rate-setting scandal".

The FT story confirmed what The Mole  wrote yesterday - that a furious Diamond was adamant that the Bank of England knew about the attempts to manipulate the inter-bank Libor interest rates and he intended to tell MPs just that.

As the FT explains, Diamond was insisting that the Bank of England had been well aware the Libor rates were inaccurate but had not objected at the time for fear of destabilising already spooked markets.

"[Regulators] knew perfectly well those rates were not the ones where banks were prepared to lend to each other," one senior banker at another institution told the FT. "They had all the evidence."

The FT suggests that a 2008 conversation between Diamond and Paul Tucker, deputy governor of the Bank of England, had mistakenly given mid-level managers at Barclays the impression that the BoE was telling them to reduce their Libor submissions.

All this serves to whet the appetite ahead of Diamond's appearance before the Treasury Select Committee.

Nils Pratley of The Guardian recommends readers to "get their tickets now" for Diamond's Commons appearance. "A chief executive of Barclays could not declare war on the Bank of England. A former chief executive can. Note: Bob's resignation is with immediate effect and he seems to be relishing the opportunity to have his say."

Faisal Islam, economics editor of Channel 4 News, suggests in his blog that it might well have been the intervention on Friday of Sir Mervyn King that finally did for Diamond. King said “the Barclays scandal goes to both the culture in the banking industry and to the structure of the banking industry” and twice refused to give Diamond his backing as a 'fit and proper' person to run the bank.

If Islam is correct in his analysis, Diamond will have nothing to stop giving it to the Bank of England with both barrels.

As Allister Heath, the combative editor of financial freesheet City AM, tweeted: "The question now is what will Diamond reveal tomorrow? Who in authority knew what and when? Let's hope he takes others down with him."

All this serves to whet the appetite ahead of Diamond's appearance before the Treasury Select Committee, which will be held in the Wilson room in Portcullis House. Mindful of the likely numbers flocking to watch Diamond's last stand, parliamentary authorities have already planned to use the Boothroyd Room to accommodate the expected overspill of journalists.

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