Libor Scandal Remains in the spotlight as Diamond Responds to MPs’ Criticism

Two months on from the emergence of the Barclays libor rate fixing scandal in the media, the subject has yet to be put to bed.

Giving evidence to MPs this week, the quality and depth of the information presented by former Barclay’s chief, Bob Diamond, were called into question. The Treasury Select Committee, to whom Diamond was asked to provide evidence, described the evidence as ‘highly selective’ and ‘unforthcoming’, going on to suggest that it ‘fell well short of the standard that parliament expects.

Following the Committee’s strong words, Diamond has since come out to defend his evidence: “I answered every question that was put to me truthfully, candidly and based on information that was available to me … I categorically refute any suggestion to the contrary.”

 

As MPs focused on the damage that the Libor scandal had done to the reputation of the UK’s financial sector, Diamond insisted that the bank’s role had been misrepresented. In fact, speaking on issues with regulation in the banking realm, Diamond went so far as to suggest that ‘Barclays is committed to being part of the solution.’ The Committee firmly disagreed, placing the blame with a number of senior figures working with Barclays at the time of the scandal.

 

The scandal, which resulted in the bank being hit with a £290 million fine, involved the fixing of a key inter-bank interest rate. The rate is not only instrumental in the security of various deals within the financial sector but also in assessing the levels of trust banks have in the health of other organisations. The Libor (London Interbank Offered Rate) is responsible for financial transactions which total a worth of around $800 trillion (approximately £507 trillion).

The Libor is hammered out based on input from big banks in London each morning and used to calculate trillions of dollars in consumer and business loans around the world. It affects how much interest ordinary people pay on everything from credit card debt to home mortgages and student loans.

The case led to the removal of several top banking figures from their positions, including Bob Diamond’s removal from his position at Barclays. MPs in the UK have argued that the scandal has gone a long way to further undermining the amount of trust that the public can reasonably hold in the country’s major banks.

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