Barlays chief stands ground against interest rate scandal

While there have been many that have called for his head, Bob Diamond, the chief executive of Barclays, says he will stand his ground against the interest rate scandal that earned his financial services provider a fine of £290 million.

Mr Diamond instead said that a number of rogue employees were responsible for manipulating lending rates for Barclays, absolving himself of any wrongdoing and adding that these renegade Barclays workers were trying to generate profit for their own benefit from trying to meddle with the London Inter Bank Offered Rate.  Known as Libor for short, the rate is used for inter-bank lending, and the scandal saw staff being prompted to submit preferential rates by derivatives traders in order to reach higher profit margins and arrange more beneficial trading positions.

There are other issues with manipulating Libor, experts say, especially in the wake of the banking crisis. Submitting rates lower than normal can lead observers to wrongly believe that a bank is more secure than it actually is, especially when its real borrowing rates are significantly higher.

The final affect that Libor manipulation has would be the impact on the retail banking markets, as lending rates for mortgages and business loans are skewed by a significant margin, and usually not in favour of borrowers. The end results have contributed to the currently disastrous economic outlook for the country, yet Mr Diamond claims that trading floor supervisors should bear the brunt of responsibility for the manipulation in light of the investigation that followed on the heels of the revelation of the Libor scandal.

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