Analysis Of Barclays Ceo Bob Diamond

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Introduction In June 2012, Barclays CEO Bob Diamond went before the Treasury Select Committee in the U.K. House of Commons admitting that his company manipulated the LIBOR (the London Inter-Bank Offered Rate). LIBOR has been used since 1969 as a reference rate in the operations of international financial markets and become the basis for trillions of dollars of financial transactions. This case study gives background and overview on the events that lead to and who were all involved with what happened. Ethical challenges are ever present here with one institution dealing with corruption and perceived ‘cheating’ with all parties involved. Importance of LIBOR “LIBOR was intended to represent the cost of unsecured funding in the open…show more content…
All this information, along with the set LIBOR rate is published daily. Once this rate is set various transactions begin to take place all around the globe. Its importance lies in being an indicator of world financial health especially dealing with derivatives which are methods of pricing complex financial transactions. Far Reaching Effects Each country and government has a stake in the LIBOR rate. Between 2005 and 2008, staffs at Barclays acted inappropriately by manipulating the process for the submission of rates. The manipulation allowed for the company to generate millions in profit and/or reducing costs. This false representation had far reaching effects particularly in America and the sub-prime mortgage rate. Many cities and municipals in the US had LIBOR based rate loans and bonds. With the manipulations of derivatives by Barclays, one of the lead banking institutions, that gave false rates for global transactions, it called into question the reputation of the city of London being a world financial center. Public outcry due to greed called into question the methods and process of banks as it pertained to LIBOR rate. Barclays, specifically, involved a ‘rogue’ group of derivative traders along with other bankers influencing the final rate for greater profits and/or reduction in loses. This showed evidence of collusion among traders as if this practice was widespread if not encouraged or at least tolerated. Illegal or morally

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