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Bob Diamond, Barclays, MPs and Libor: five more points Bob Diamond, Barclays, MPs and Libor: five more points
(about 4 hours later)
1. Paul Tucker's testimony will be more interesting. The biggest decision Bob Diamond has to make in the next few weeks is whether to accept the £22m or so that the board (probably) will offer him as a payoff. Tucker, on the other hand, is fighting to become the next governor of the Bank of England. He won't succeed if his evidence, like Diamond's, is judged to be implausible. That means giving a full account of not only the Diamond memo, but also why regulators appear to have tolerated the open secret that the Libor numbers couldn't be trusted in 2008. 1. Paul Tucker's testimony will be more interesting than that of Bob Diamond, whose biggest decision in the next few weeks will be whether to accept the £22m or so that the board (probably) will offer him as a payoff. Tucker, by contrast, is fighting to become the next Bank of England governor . He won't succeed if his evidence, like Diamond's, is judged to be implausible. That means giving a full account of both the Diamond memo and also why regulators apparently tolerated the open secret that theLibor numbers couldn't be trusted in 2008.
2. The Treasury select committee has form in flunking it. Remember the encounter with the private equity barons in 2007? It was even more embarrassing than yesterday's hearing. Highly coached businessmen versus under-prepared MPs led to misunderstandings and frustration on both sides. Part of the problem is the format – every member gets his or her 10 minutes and they all go for different angles. Better for all to agree in advance on the questions that must be posed – then insist on getting the answers. If they're incapable of doing the latter, hire a QC to do the interrogation. The MPs' timidity was astonishing. Come on, if you don't like Diamond addressing you by your first name, just tell him, don't tweet your complaint. It wouldn't happen on a US Senate committee inquiry. 2. The Treasury select committee has form in flunking it. Remember the encounter with the private equity barons in 2007? It was even more embarrassing than Wednesday's hearing. Highly coached businessmen versus under-prepared MPs led to misunderstandings and frustration on both sides. Part of theproblem is the format – every member gets his or her 10 minutes and they all go for different angles. Better for all to agree in advance on the questions that must be posed – then insist on getting the answers. If they're incapable of doing the latter, hire a QC to do the interrogation. The MPs' timidity was astonishing. Come on, if you don't like Diamond addressing you by your first name, just tell him, don't tweet your complaint. It wouldn't happen on a US Senate committee inquiry.
3. One of Diamond's seemingly sensible remarks was that Barclays was unfairly beaten up for being the first in line in the industry-wide Libor investigation – a "first move disadvantage" as committee chairman Andrew Tyrie put it. But was Barclays first solely because it agreed to co-operate? We learned yesterday that the Financial Services Authority had had concerns about the Barclays' culture for a long time. Was this also a factor? Did the bank choose to head the queue or was it pushed there? The FSA would do well to clear up this point before the idea becomes entrenched that a chief executive who agrees to co-operate in an industry-wide investigation is most in danger of losing his job. 3. One of Diamond's seemingly sensible remarks was that Barclays was unfairly beaten up for being the first in line in the industry-wide Libor investigation – a "first move disadvantage" as committee chairman Andrew Tyrie put it. But was Barclays first solely because it agreed to co-operate? We learned on Wednesday that the Financial Services Authority had had concerns about the Barclays' culture for a long time. Was this also a factor? Did the bank choose to head the queue or was it pushed there? The FSA would do well to clear up this point before the idea becomes entrenched that a chief executive who agrees to co-operate in an industry-wide investigation is most in danger of losing his job.
4. Bad deeds have been exposed at two UK companies this week. In the case of GlaxoSmithKline, fined $3bn after admitting bribing doctors and encouraging the prescription of unsuitable antidepressants to children, the wrongdoing was exposed partly by the good work of whistleblowers. Would it be helpful to offer financial inducements to would-be whistleblowers in banks' trading rooms? In the Barclays' case, somebody might have been tempted to spill the beans to regulators in return for payment worth a couple of years' bonuses. Of course, such a system would rely on the regulators being awake, but bonuses for incriminating evidence sounds an interesting avenue. 4. Bad deeds have been exposed at two UK companies this week. In the case of GlaxoSmithKline, fined $3bn after admitting bribing doctors and encouraging the prescription of unsuitable antidepressants to children, the wrongdoing was exposed partly by the good work of whistleblowers. Would it be helpful to offer financial inducements to would-be whistleblowers in banks' trading rooms? In Barclays' case, somebody might have been tempted to spill the beans to regulators in return for payment worth a couple of years' bonuses. Of course, such a system would rely on the regulators being awake, but bonuses for incriminating evidence sounds an interesting avenue.
5. Marcus Agius, Barclays chairman since January 2007, is due to appear before the committee next Tuesday. But let's also hear from a wide selection of the famous names who served as non-executive directors on the board in the 2005-09 period. How did they view the culture of Barclays and Barclays Capital at the time? What did they investigate? Did they get the information they requested? Did they worry that the organisation was being swamped by investment bankers? The answers of supposedly independent non-executives ought to be more revealing than Diamond's tiresome repetitions of his love for the organisation. 5. Marcus Agius, Barclays chairman since January 2007, is due to appear before the committee next Tuesday. But let's also hear from a wide selection of the famous names who served as non-executive directors on the board in the 2005-09 period. How did they view the culture of Barclays and Barclays Capital at the time? What did they investigate? Did they get the information they requested? Did they worry that the organisation was being swamped by investment bankers? The answers of supposedly independent non-executives ought to be more revealing than Diamond's tiresome repetitions of his love for the organisation.