Wednesday, July 4, 2012 | Categories: Episodes
Former Barclays CEO Bob Diamond faced questioning on the bank's role in the LIBOR scandal Wednesday. (Laurent Gillieron/AP)
Today's guest host was Mike Finnerty.
Part One of The Current
It's Wednesday, July 4.
A new study finds the vast majority of Canadians support decriminalizing marijuana.
Currently, the Prime Minister has yet to see the study, but says he can't wait to ignore it.
This is The Current.
Barclays Banking Scandal - Labour MP John Mann
The Chancellor of the Exchequer, George Osborne is in charge of Britain's finances. He's not the only person happy to see the back of Bob Diamond, the now ex-CEO of Barclays Bank, and a big, swaggering American-born London banker who came to represent many of the qualities people revile in what is called City culture, as in the City of London, Britain's Bay St.
The LIBOR rate is supposed to be a neutral benchmark for what international banks charge when they loan each other money. In turn it is used to set the rate that millions of everyday people pay around the world. Trillions of dollars worth of corporate loans, mortgages, student loans and derivatives all over the world are pegged to the LIBOR.
U.S. banking analyst Richard Bove says the allegations against Barclays might be the most important banking story since the global financial system nearly cratered in 2008.
Well, because so many investments and financial products are tied to the LIBOR, there's a lot of money to be made on small changes to the rate. And according to regulatory authorities in Britain, employees at Barclays took full advantage.
Here's a sampling of e-mails and chat messages sent between people at Barclays who helped set the LIBOR rate... and people at Barclays who bought and sold financial products based on that rate. These are excerpts from different exchanges between different individuals, not a single exchange.
On Wednesday, Diamond testifies before the British House of Commons Treasury Select Committee. Labour MP John Mann has a seat on that committee and will be one of the questioners. We spoke to him, before the hearings began.
We also invited Barclays to comment on the story this morning. However, they said they would "respectfully decline an interview" and referred us to statements they had prepared. Here is a portion of one of their statements:
"Barclays is proud of the service that we provide our customers and clients; and the benefit that we bring through that to the communities in which we live and work."
Barclays Banking Scandal - Geraint Anderson
So what about the culture of those who work in London's financial district? Geraint Anderson worked as a banker in The City for 12 years and was so disillusioned by what he witnessed that he wrote an anonymous weekly column in a London paper called Cityboy. The notoriety of the column allowed Anderson to quit banking and become an author.
His latest book is Payback Time - a novel about a group of friends who take revenge on a bank by manipulating the markets and dodging the regulators.
This segment was produced by The Current's Gord Westmacott, Sujata Berry and Pacinthe Mattar.
Other segments from today's show: