Barclays has published its written evidence for tomorrow’s hearing. The document raises some points I think are important.
First, the document states:
The traders’ behaviours captured within the settlement documents are not representative of the values and standards to which the vast majority of the 140,000 people that work at Barclays operate every day. Those colleagues serve with integrity; pride; and the utmost probity. They have been badly let down by the actions of a few.
There’s a confusion in the reactions to the scandal. On the one hand there is a problem in the culture of banking (especially investment banking) (see King, Osborne). On the other, there are the thousands of decent and upstanding people who work for banks. Andrew Tyrie (who is to run the Treasury Committee’s review) said yesterday:
By any standards, the LIBOR scandal, for which 20 banks around the world are now being investigated, is shocking. It has corroded trust in the UK financial services industry and it is a shameful affair. I find it particularly sad that it will have unfairly damaged the reputations of hundreds of thousands of our constituents who work hard and honestly in the financial services industry. The UK’s reputation has been tarnished, but it can be restored and enhanced if we draw the right lessons. The Treasury Committee will continue with its inquiry into what exactly happened. We will be holding the inquiry on Wednesday with the chief executive of Barclays, and we will also probably call the British Bankers Association and the regulators to find out exactly how this all happened.
There are some important questions here: did Barclay pick the wrong people to be responsible for making its Libor submissions, or did it not protect them sufficiently once they were in that position from the persuasions of a few bad apple traders? Do we need solutions aimed at ensuring only honest people are given such positions, or do we need to ensure that structures are established to protect people from weakness of character.
Second, Barclays states that it is:
ironic that there has been such an intense focus on Barclays alone, caused by our being first to settle in the midst of an industry-wide, global investigation.
Perhaps they should have better crisis consultants. The investigation into Libor fixing had been going on for some time, and was generally known to be ongoing. So the announcement of the first settlement in the context of the investigation was bound to attract attention, and the fact that the settlement related to behaviour before the financial crisis as well as during the crisis was startling (and the co-mingling of acts during these two different periods is generally problematic – much attention is focused on whether the Bank of England is to blame in relation to the crisis-related quotes) and bound to be noticed.
However, if it were to turn out that Barclays and its personnel were in fact more co-operative than other banks and suffered more in terms of harms to reputation and resignation than other banks and their personnel who were not so co-operative this would be a very bad thing for the future of financial regulation. It would be an invitation for targets of regulatory probes to be unco-operative in future.