Counterparties: The next bank CEO on the hot seat

By Ben Walsh
June 29, 2012

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Bob Diamond, the CEO of Barclay’s, is under increasing pressure (a $450 million settlement over charges of manipulating a key interest rate will do that). The governor of the Bank of England declined to call Diamond “fit and proper” to run the bank. For American readers, that’s British English for ‘I’m not saying he shouldn’t be fired, but…’

The Financial Times has called on him to resign, saying “if he had an ounce of shame, he would immediately step down”. The FT cites this almost too-poetic quote from Diamond: “Culture is difficult to define but for me the evidence of culture is how people behave when no one is watching”.

The vitriol isn’t new. In 2010, Bloomberg Markets wrote that “in some UK media and political circles, Diamond is the personification of a greedy banker, a symbol of all that has gone wrong in global finance”. Diamond’s public comments since have done little to change this view.

In 2011, he was called the “unacceptable face of banking” by Lord Mandelson, despite forgoing a bonus in 2008 and 2009. Last year, Diamond told Parliament that “there was a period of remorse and apology for banks, that period needs to be over…The biggest issue is ‘How do we put some of the blame game behind us?’…There’s been apologies and remorse, now we need to build some confidence”. (Diamond pulled in a $10 million pay package last year.)

Shareholders haven’t really agreed. Diamond faced angry protests at an April shareholders meeting as “the bank paid million-dollar bonuses to its senior executives while earnings and the share price fell”.

On Wednesday, Diamond agreed to forgo a bonus over the LIBOR scandal, but the limited, legalistic phrasing of Diamond’s new letter to Parliament won’t do him any further favors. He says that “the authorities found no evidence that anyone more senior than the immediate desk supervisors was aware of the requests by traders”, but is silent on the extent of his and the firm’s knowledge, irrespective of what regulators found.

Diamond also dodges the the issue of ultimate responsibility: “I accept that the decision to lower submissions was wrong”. He tries to get points for pointing to the “level and speed of [Barclay's] co-operation” with authorities. As Joseph Cotterill says, the problem is that cooperating fully with authorities is categorically different than fully informing them.

Unlike Jamie Dimon, Bob Diamond may not be able to fall back on his past performance and could only have his own missteps to point to. – Ben Walsh

On to today’s links:

EU Mess
The Spanish bailout is “effectively a back-door bailout of reckless German lending” - International Financing Review
Europe finally moves a bit closer to a banking union - WSJ

By letting its risk manager retire  - rather than firing her – JPMorgan let her walk away with $21 million - Bloomberg
What happened to Ina Drew’s clawback? – Felix

“Wicked problems” and why the health health care debate isn’t over - New Yorker

Must Read
Inside the staggering wealth of China’s political elite and its likely next president - Bloomberg

Cameron issues a not-so-subtle attack on Bob Diamond - Bloomberg
A request for a Leveson-style inquiry into Britain’s banks - HM Government e-petition

Crisis Retro
“It is the worst deal in the history of American finance” - WSJ

Wall Street is still ignoring next year’s “fiscal cliff” - Fortune
The odds of a deflationary global recession are rising - Business Insider

“Maybe there are no good governmental nudges” - American Banker

Right On
An open letter to anyone who posts a picture of food on Instagram - McSweeney’s

“A Big Idea from Aspen: Ending Universal Suffrage” - John Carney

The subtle differences between “Star fucker” and “star-fucker” at the New Yorker - New Yorker

Corporate profits fall for the first time since the recession - NYT

Vox Pop
What healthcare professionals think of the SCOTUS Obamacare ruling - BuzzFeed

Odd Rebuttals
Economists do understand the economics of eggs - Globe & Mail



We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see

What’s been going wrong with banking culture is what happens when you let the traders run the banks. Chaos. Lack of morals. Selfish greed. And no supervision.

Posted by FifthDecade | Report as abusive

WTF is British English? Am I supposed to imagine Merv speaking Welsh in a thick Scotch accent? Honestly

Posted by oneagainstmany | Report as abusive

About Ina Drew, me think the one-line summary should read:

” By letting its risk manager retire – rather than firing her – JPMorgan made sure she would kindly shut the f**k up and let Jamie’s bygones be bygones. ”

More plausible, no?

Posted by Frwip | Report as abusive

“Unlike Jamie Dimon, Bob Diamond may not be able to fall back on his past performance and could only have his own missteps to point to.” (BenW)

It goes a bit deeper than that, BW – and from two different angles. First, the Barclays’ crew barfed all over themselves when they left a paper trail conclusively demonstrating per se anti-trust violations (a price-fixing conspiracy). Jail-time is the standard punishment for that. He’d better be provably pure as driven snow in this or one of his juniors is going to grass-him-out in exchange for not being sent to place where he has to answer to the name “Bitch”.

On a more fundamental level, Diamond is a Scots-Irish, Catholic Yankee, not a member of the London-toffs or the proper US tribe. He has no reason to expect to be allowed to “walk” like DSK on the rape or Corzine on the $800Mil or Spitzer on the hookers or Grubman on the fraud. Unless he’s got somethin’-on-someone and can set-up something like what Marc Rich did, he’s got a king-size personal problem IMO.

Posted by MrRFox | Report as abusive

@FrWip – for sure, more plausible. Still, one must give credit where it is due. Team-JPM got Drew paid-off, shut-up and gone within 48 hours of the story breaking – before there were any criminal or legislative investigations announced. Goes a long way to keeping them all out from under an “obstruction of justice” charge. The lawyer who got that done earned his money. *is jealous*

Posted by MrRFox | Report as abusive

Re: End universal suffrage. Dangerously provocative and thoughtful, but you can’t play with it in your mind for more than 30 seconds without asking “Quis custodiet ipsos custodes?”

Posted by Curmudgeon | Report as abusive

@Curmudgeon, they have a point. The average US citizen is clearly not prepared to choose their own leaders in this complex modern world. They ought to leave that to people who understand the global economy, the Wall Street elite.

Tongue-in-cheek, of course, but you could make a strong argument that our political system already operates that way.

Posted by TFF | Report as abusive

TFF, it didn’t seem like the presenter was targeting US elections, but rather pointing out that even the US went through stages (free while landowners, men in general, women, blacks, 18-21) over a period of centuries, and we shouldn’t expect Third World former dictatorships to adopt universal suffrage immediately.

But if you limit in any way, under any circumstances, the slope becomes very slippery. At least universal suffrage gives us an ideal to try for, even if the reality is somewhat different. I served in this nation’s armed forces many years ago, and I believe I did so in order for both the wealthy Wall Streeter and the dirt poor to have the ultimate expression of democracy.

Posted by Curmudgeon | Report as abusive

@Curmudgeon, I realize that. But he should have been!

The US electoral process is abysmal. Still don’t see any better alternative.

Posted by TFF | Report as abusive

@TFF Check out the Swiss method. It’s resulted in 50 years of stable, non-partisan government and uses Proportional Representation to allocate seats in Parliament (equivalent to Congress). The President here serves for one year only as a ceremonial figurehead, but wields no extra power.

I can’t see the US power elite giving up their love of violent destruction and meddling in the affairs of other countries though. The Swiss of course are neutral. If you don’t waste your money on war machines it’s amazing how much economic progress you can have.

Posted by FifthDecade | Report as abusive