MarketWatch First Take'Period of remorse' catches up to Diamond
7/3/12 5:58 AM ET (MarketWatch)
FRANKFURT (MarketWatch) -- Sometimes sorry isn't enough.
Robert Diamond's resignation, effective immediately, as chief executive officer of
That was just one in a series of "sorries" delivered by the bank as it attempted to fend off calls for Diamond's head after Barclays last week paid nearly $454 million to settle an investigation by U.S. and British authorities into allegations that personnel falsely reported interbank lending rates, resulting in the manipulation of crucial benchmarks used to price trillions of dollars' worth of credit products around the globe.
On Monday, Chairman Marcus Agius stepped down, saying the "the buck stops with me."
It didn't.
On Tuesday, after further calls for Diamond's ouster, the CEO said he would step down because the "external pressure placed on Barclays has reached a level that risks damaging the franchise -- I cannot let that happen." Agius returned to the chairmanship pending the appointment of a new CEO.
The contrite Diamond stands in contrast to the pugilistic CEO who in January 2011 lectured British lawmakers on the perils of continued bank bashing in the wake of the financial crisis.
Diamond made headlines and earned the ire of bank critics at the time when he told a parliamentary committee: "There was a period of remorse and apology for banks. I think that period needs to be over."
Diamond defended the industry, saying it was important for banks to be willing to take risks. Diamond later adjusted his rhetoric, acknowledging in a lecture the following November that bankers needed to become "better citizens."
The Libor probe, of course, extends beyond Barclays.
Meanwhile, across the Atlantic, J.P. Morgan Chase & Co. (JPM) CEO James Dimon faces a fight of his own to stem the damage to his firm's balance sheet from the "London Whale" fiasco. See: J.P. Morgan loss may reportedly hit $9 billion.
Both Diamond and Dimon had pushed back against calls for tougher regulation and an overhaul of financial-industry practices.
While the London Whale offers ammunition to regulators, the Libor scandal carries particular peril. That's because the benchmarks at issue are used to set interest rates on a wide range of lending products, including car and home loans. That's not going to win much sympathy for those arguing that banks need to take more risks.
The "period of remorse" may just be beginning.
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