Fallen banking titan Bob Diamond on Wednesday described regulators on both sides of the Atlantic as partly complicit in a scandal involving the manipulation of a key interbank lending rate, telling a British parliamentary committee that government watchdogs had failed to act after his bank, Barclays, informed them of industrywide irregularities during the 2008 financial crisis.
The allegations highlight the relationship between financial institutions and regulators at a time when risk-taking and misdoings at big banks once again are the focus of heated debate in Washington, on Wall Street and in London. Diamond stepped down on Tuesday as chief executive of Barclays on the heels of a U.S.-British investigation that resulted in a $450 million fine for the bank for manipulating key lending rates between 2005 and 2009. The resignation ended the tenure of a legendary figure who brought a high-flying American-style culture to the bowler-hatted bankers of London's financial district.
Barclays is only one of a number of global banks being investigated for tainting the credibility of Libor, the benchmark figure that largely determines the adjustable lending rates for U.S. credit cards, student loans and some mortgages. The emerging scandal has touched off a firestorm engulfing the London financial world, with Prime Minister David Cameron this week announcing a broader inquiry into banking standards that is set to haul some of the globe's most powerful financiers before a parliamentary committee.