Simon Johnson has this amazing title criticizing the recent Libor case.
On Monday, Robert E. Diamond Jr., the chief executive of Barclays, one of the largest banks in the world, was supposedly the indispensable man, with his supporters contending that he was the only person who could see the global megabank through a growing scandal. On Tuesday, Mr. Diamond resigned, and the stock market barely blinked. In fact, Barclays stock was up three-tenths of 1 percent. As Charles de Gaulle supposedly remarked, “The cemeteries are full of indispensable men.”
Mr. Diamond’s fall was spectacular and complete. It was also entirely appropriate. Dennis Kelleher of Better Markets, a financial reform advocacy group, summarized the situation nicely in an interview with the BBC World Service on Tuesday. The controversy that brought down Mr. Diamond had to do with deliberate and now acknowledged deception by Barclays staff with regard to the data they reported for Libor, the London Interbank Offered Rate.
Mr. Kelleher was blunt: the issue is “Lie More,” not Libor (pronounced LIE-bore). This post on his blog makes the point that this behavior affects credit transactions with a face value of at least $800 trillion.
Mr. Kelleher’s words may seem harsh, but they are exactly in line with the recently articulated editorial position of The Financial Times, not a publication generally hostile to the banking sector. In a scathing editorial on June 28, (“Shaming the Banks Into Better Ways” ), the editorial writers blasted behavior at Barclays and nailed the broader issue in what it called “a long-running confidence trick”
Prof Johnson’s umpteenth effort to warn us of the issues in financial sector. Unfortunately, most of the warnings fall on deaf ears…
