Waves of Lawsuits PendingBarclays Affair Rocks European Banking Industry
By Martin Hesse
GFP: This article appeared on the "Spiegel", which is a German Main Stream Media Weekly Newspaper.
REUTERS
The LIBOR rate-fixing scandal has sent a shock wave through the whole European financial industry. A number of other banks are suspected of having manipulated interest rates, and Deutsche Bank has already suspended two employees. Experts warn of a wave of lawsuits that could ruin some institutions.
Bob Diamond seemed nervous when he sat in front of the members of the Treasury Committee of the British House of Commons last week. He had been forced to resign as CEO of Barclays, a major bank, the day before. Suddenly Diamond, once such an important figure, seemed very small indeed.
He poured himself a glass of water, cleared his throat and wiped his mouth with a handkerchief. The banker seemed like a stubborn child as he described his view of the scandal over the manipulation of interest rates that had just cost him his job.
Yes, Barclays employees had behaved reprehensively when they manipulated interest rates for years, Diamond said. But he also insisted that he had known nothing about it, and pointed out that other banks had also fudged their financial records. "I love Barclays. History will judge Barclays as an incredible institution because of its people."
Historians are probably more likely to remember Diamond's appearance and the scandal as a milestone in the demise of investment banks.
Greed and Egos
Barclays was ordered to pay a fine of $500 million (€407 million), because bank employees allegedly manipulated the London Interbank Offered Rate (LIBOR) for years. The rate is determined by a group of international banks, which provide the British Bankers' Association (BBA) with the rates at which they can borrow money from other lenders in the short term on a daily basis.
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