LONDON - Some of the world's most powerful and influential bankers - the chairmen and chief executive officers of the major global banks - must be getting shivers down their spines following the dramatic resignation of Bob Diamond, the CEO of scandal-hit Barclays Bank, Tuesday. On Monday his Chairman Marcus Agius had done the honorable thing by tendering his resignation. He will stay on until a new Chairman is appointed. More resignations at Barclays are expected to follow especially those other three senior executives who announced that they would forego their bonuses for this year in the wake of the scandal which saw the bank fined £290 million by US and UK regulators for attempting to manipulate key Libor interest rates from 2005 to 2009. Given that the US Justice Department, the FBI and the Serious Fraud Squad are investigating several other banks involved in the Libor benchmark rigging scandal facilitated by their traders, it is almost inevitable that banks such as Royal Bank of Scotland, JP Morgan, UBS, Deutsche Bank, Lloyds Bank, HSBC and others may also be facing hefty fines. If Marcus Agius and Bob Diamond were "hounded out' or 'eased out" of their jobs, surely the same fate would befall senior executives at other banks '"convicted" of the same rate-rigging "misdemeanor" and manipulation. While senior bankers in general are on the defensive, and some City traders still smirking in denial and defiance, British politicians as usual are in posturing mode along predictable party and center right and center left ideological lines. The truth is that successive Labour and Conservative governments over the last four decades have been cozying up to the City relaxing the grip of financial regulation in pursuit of hot tax pounds, which the financial services industry was contributing in the billions of pounds to the coffers of the Exchequer. Yet in times of financial crisis, credit crunch and economic recession, the world is expecting some of these very politicians to right their own lack of oversight during those "we've never had it so good" times. Given the increasing cynicism of ordinary voters about their politicians and the democratic process, it is perhaps not surprising when UK Chancellor of the Exchequer (the Finance Minister) George Osborne welcomed Bob Diamond's decision to resign, saying he hopes it is the "first step towards a new culture of responsibility in British banking". "I think Bob Diamond has made the right decision for Barclays and the country," Osborne told the BBC, saying the UK needed a strong Barclays concentrating on lending and contributing to economic recovery. The same can be said of the opposition Labour Party leader, Ed Miliband, who emphasized that Diamond's decision was "necessary and right. But this is about much more than one individual, it's about the culture and practices of the banking industry." The fault line between the Conservative/Liberal Democrat Coalition Government and the opposition Labour Party is that the former wants a cross-party parliamentary inquiry into the rate-rigging scandal and the state of British banking, chaired by the Head of the Treasury Select Committee, Andrew Tyrie MP, to report by the end of the year; while Labour wants a full fledged enquiry into the scandal and to make recommendations for changes for the future, to be headed by a judge and independent of politicians. Diamond stressed that it was difficult to stay on because the external pressure on the bank risked "damaging the franchise". "I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth," he added. Privately, reports suggest, he feels he was hounded out of office especially by the reaction of some members of parliament. But according to the BBC, it emerged that Diamond was also partly "eased out" of office following private conversations between Bank of England Governor Mervyn King and the Chairman of the Financial Services Authority (FSA), the banking regulator, Lord Turner with Barclays Chairman Marcus Agius that they would not stand in the way if Diamond resigned. Lord Turner last week described the public's outrage at the bank's actions. "The cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits - has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by the financial crisis," he told the FSA's annual meeting. Diamond, who was the boss of Barclays Capital, the investment banking franchise of the Barclays Group, at the time of the Libor-rigging practices during 2005-2009, has always maintained that he was not aware of any of the wrongdoings and manipulations taking place under his own nose. The issue of course raises serious questions about the internal corporate governance oversight mechanisms in place especially in the internal and external audit functions, the supervision of the trading floor, and the failure of the rating agencies to spot these practices in their regular rating evaluation of the bank. To his credit, Diamond will still appear before MPs on the Treasury Select Committee this afternoon (Wednesday) to answer questions about the Libor affair. "I look forward to fulfilling my obligation to contribute to the Treasury Committee's inquiries related to the settlements that Barclays announced last week without my leadership in question," he said in a statement.
