Ahead of Bob Diamond’s Treasury Select Committee appearance today, we look at the key questions that still need to be answered.
According to the regulators’ documents, “senior management at high levels” first instructed “less senior managers to reduce Libor submissions to avoid negative [media] comment” on September 3, 2007. Barclays (LSE: BARC.L - news) yesterday said that “the origin of these instructions is not clear”. The language of “senior management at high levels” is very suggestive.
£ What message did you believe Deputy Bank of England Governor Paul Tucker was trying to convey from your call with him on October 29, 2008?
According to Mr Diamond’s memo of the call, Mr Tucker said that “it did not always need to be the case that we [Barclays’ Libor submissions] appeared as high as we have recently”. Mr Tucker’s turn of phrase is very curious and easily open to the interpretation that Barclays should be reducing its submissions, as investment bank chief Jerry del Missier took it to mean. Central bankers are renown for talking in riddles to drop hints on policy. Mr Tucker is a past-master at it. On the other hand, it is possible that Mr Diamond deliberately led Mr del Missier to form an understanding that Mr Tucker did not give.
£ Did you believe regulators were turning a blind eye to Libor rigging?
Barclays’ documents show that it firmly believed other banks were guilty of Libor rigging and that it was acting defensively to head off negative speculation. The documents also show that Barclays contacted regulators 32 times in just 14 months from August 2007 over Libor, and was “disappointed that no effective action was taken”.
Mr Diamond’s memo of the conversation with Mr Tucker also suggested that “senior figures within Whitehall” wanted Barclays to lower its Libor submissions. When Mr Diamond suggested that Mr Tucker tell those “figures” other banks were rigging Libor, Mr Tucker did not think that would be a good idea, saying “oh, that would be worse”. The implication may be that the regulators wanted Libor to be as low as possible for reasons of financial stability.
£ Do you accept that the attempted Libor manipulation by traders reflected the culture you established at BarCap?
Mr Diamond has so far refused to accept any responsibility for the actions of the traders who tried to abuse the system, although he has admitted it happened “on my watch”. As Lord Turner, chairman of the FSA, has pointed out: “We would be fooling ourselves if we thought that the behaviour [is] not found in other areas as well.”
£ Why did you and Mr del Missier resign?
The order came through the Barclays board on Monday night from Sir Mervyn King, the Bank Governor. Mr del Missier had already been found to have instructed staff to lower their submissions, but the FSA cleared him of wrongdoing. It is unclear what Mr Diamond thinks made the regulators change their minds.
£ Will you give up your pay-off?
Mr Diamond is eligible for £1.35m in lieu of annual pay, as well as £675,000 in annual pension contributions. He also has roughly £18m in unvested share options.