Barclay's Diamond Resigns

After saying he wouldn't, Barclay's CEO Bob Diamond quit. Not to be confused with JP Morgan's Jamie Dimon, this Diamond faced a scandal but couldn't hold on.

One Barclay's investment banker - who did not want to be identified - is quoted in a Reuter's report as saying that his staff were disappointed.

"Everyone here has been bandying around names, but it's going to be hard to find someone of the same quality as Bob and John (Varley, his predecessor). I guess it would be hard to appoint someone from the investment banking side now."

If you read the Reuter's report, you'll see that Diamond was involved in lying when he was an investment banker. He was involved along with a group of other Barclay's employees. They lied in order to manipulate the LIBOR rate. Manipulating that rate would make Barclay's look like a financially stronger bank than it really was. If Barclay's looked stronger than it really was, that would give Diamond and the other investment bankers a leg up in pursuing deals. That leg up would result in their earning bigger fees and commissions. 

In other words, they lied in order to make more money.

If you or I lied to make money and were caught we might be fired or arrested. But things don't work that way in the financial world. As long as everyone makes money, everyone looks the other way. Then when they're caught, somehow they manage to either get away with it or they resign - taking with them the ill-gotten gains that made them rich.

Do you wonder why so many people resent Wall Street bankers? They play by different rules than the rest of us.

But understanding what this guy Diamond did is a start. He lied. It's as simple as that. And when you think about it, because he lied and made money from his lying, isn't that a form of cheating too? 

So he lied and he cheated.

I'm not writing this to whip you up into a frenzy of Wall-Street-Banker-Hatred. I'm certainly not trying to make you feel envious of these people. (If you envy them, then that means you'd want to lie and cheat if only you had the chance, right?)

I bring this up because when you read some of these media reports, they almost gloss over the moral component. Or if they do mention any moral component, they frequently focus on the individual and not on the company and its way of doing business or even the industry as a whole and it's way of letting things slide as long as people make gobs of money.

And, by the way, what's up with that investment banker saying that it'll be hard to find someone of the "same quality." What quality? Is the quality that he made money by lying and cheating? Would anyone in another profession come out and say something similar?

For example, if someone in the air conditioning business increased profit margins by knowingly selling inferior products to poorer people who might be tempted to buy a cheaper product, not knowing that it was inferior, would people want to replace that person with someone of the "same quality" if he was caught?

Anyway, you see how the financial industry gets a bad name. Frequently they deserve it.

As for Diamond, he'll leave rich and - who knows? - may return to the industry to make millions more. Somehow I doubt he'll be held accountable.

The article says he'll testify before UK regulators. But we've seen that one before, haven't we. A fellow named Corzine comes to mind.