Why Barclays ex-CEO Bob Diamond is clueless
(MoneyWatch) COMMENTARY Former Barclays (BCS) CEO Bob Diamond got slated for his performance earlier this month appearing before members of Britain's Parliament about the bank's rigging of interest rates. Simply, few people were convinced by his testimony. Chair Andrew Tyrie concluded: "I think, cumulatively, the whole package looks somewhat implausible." Other members of Parliament concluded Diamond had either been "incredible or incompetent."
Barclays chairman Marcus Agius also testified, and the story got worse when it was revealed that the bank's regulator had earlier articulated concerns about the bank's culture. Agius's testimony seemed at odds with Diamond's, prompting one committee member to tweet that Diamond had "calculatedly and deliberately misled this committee."
British Parliament grills Barclays ex-CEO DiamondBarclays' Bob Diamond: "Incredible or incompetent"Libor 101: Why you should care
Stung into action, Diamond wrote to the committee, offering to return to provide more testimony. His motives provided fascinating insight into his priorities; he protested that comments about him "have had a terribly unfair impact on my reputation, which is of paramount concern to me."
What seemed to matter most to Diamond wasn't the bank or its reputation, nor its employees. Shareholders and investors didn't seem to count for much, either. No, what mattered to Diamond -- his "paramount concern" -- was himself. Earlier assumptions that his testimony was primarily informed by considerations for his next career suddenly appeared valid.
What has angered everyone about his exchange is the degree to which Diamond seems more distraught by what has happened to him than what has happened to his bank, his industry, his shareholders, or indeed the reputation of the U.K. (where the bank is based), or the U.S. (whose management style Diamond is said to exemplify.) Everyone has apparently been tainted by association, but all Diamond seems to care about is himself. Narcissism raises its ugly head again, with the former CEO seemingly unable to recognize that this scandal is not all about him and that his reputation is not the chief asset to have been tarnished.
To be fair, Diamond was personally criticized by the regulator, the Financial Services Authority, which was at pains to explain to the bank's board that its CEO no longer commanded confidence. He is right to take this criticism personally because it is aimed at him.
What he seems unable to appreciate is that, while he is undoubtedly damaged, he is by no means alone and many more may have suffered greater harm. In the U.S., the Justice Department, along with several cities and state pension funds, have launched legal actions, asserting losses due to the manipulation of the interbank lending rate.
Meanwhile, that the former CEO has taken home total compensation of around $150 million since 2006 has not endeared him to a public suffering from a fragile economy and high unemployment.
As this drama unfolds, it also seems likely that Diamond will be called to testify in the U.S. Presumably, he will prepare for his next turn in the spotlight. He'd better anticipate a hostile audience, especially with DOJ investigators looking at any fraud that Barclays may have committed under his watch in what one American academic has called "the signature financial fraud of the meltdown."
This all goes so far beyond the issue of Diamond's reputation as to make his remarks look petty, self-centered, and tragically irrelevant. Once the lead player in his own drama, Diamond seems not to have noticed that the play has changed, there are many new and more important character, and the lines are no longer his to write.
More broadly, close links between financial firms and the unelected House of Lords, together with links between the big three accounting firms and political parties, has continued the public unraveling of political power in the U.K. If News Corp (NWSA) Rupert Murdoch's phone hacking scandal revealed how in thrall to the media the government was, the banking scandal is revealing how beholden to finance the government has been.
In a dreary, flood-ridden country, the only bumper crops this summer are cynicism and rage.
