MPs' report on Barclays - no one looks good

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Barclays headquarters
Barclays was not the only bank involved in the rate-rigging scandal. Photo: Press Association

After the scandal of rate rigging exploded and the high drama of Bob Diamond's departure, MPs on the Treasury Select Committee set about trying to work out what went wrong.

In their report, just released, frankly, none of the main players look good.

But at a time when the committee says trust in banking is at an "all time low", it is worth considering the potential impact the report will have on some of the characters who are trying to fix it:

Barclays

The bank is heavily criticised for failings in management, governance, and culture. The committee calls on them to sort things out, and fast rejects the idea that the bank was somehow instructed to rig rates by anyone in Westminster or at the Bank of England. But there seems little in the report that will take them by surprise.

They have already appointed a new chairman who is on track to appoint a new chief executive in the next six weeks. The bank is well aware of the terrible reputational damage the scandal has cost them, and they are aware they need to change to fix it. Perhaps the report will make it even more likely they will stay away from appointing a chief executive who could in anyway be perceived to be a lover of risk.

Bob Diamond

He was never going to win any popularity contests in this country. And the report makes that even less likely. The committee doesn't just criticise his actions, they also question whether he was being entirely straight with them. They criticise his, and Barclays' attempt to rely on an email from the deputy governor of the Bank of England, Paul Tucker, as some kind of instruction for the bank to fiddle interest rates.

MPs suggest it may well have been a 'smokescreen'. Mr Diamond is already in America, and is unlikely to return to the UK banking scene. This report would make that much harder.

The Bank of England

There is some difficult reading in the 126 pages for the bank itself and the governor, Sir Mervyn King.

The committee is clearly disappointed that the Bank failed to understand what was going on, and are deeply critical of Sir Mervyn King's involvement in finally getting rid of Mr Diamond. It's clear they don't really believe he should have been getting involved in that way

Paul Tucker

The deputy governor by contrast comes out of the report rather better than some might have imagined. The MPs make clear the email between him and Bob Diamond did not make a 'fundamental difference' to Barclays' behaviour. The wrong doing started well before, and he, they believe, did not seek to encourage it. His hopes of succeeding Sir Mervyn as the next governor that had dimmed may yet be rewarded.

The Financial Services Authority (FSA)

By contrast, the MPs have some tough criticisms for the FSA, both in their failure to pick up what was happening, and then for misjudging the way in which Barclays responded and Diamond's subsequent shambolic resignation.

Unlike Paul Tucker, the report may make the other hopeful for the governor's job, Lord Turner, the FSA chair, look a less likely candidate.

What the report also acknowledges is that Barclays was not the only bank involved in rigging interest rates.

The Libor scandal has already caused tremendous damage to both Barclays and the banking industry. Sadly for the industry, this may just be the start.