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In the wake of the bank rate-rigging scandal, Bob Diamond, Barclays chief executive, announced his resignation from the post with immediate effect on Tuesday.
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"There isn't just one bank involved here. I think that Barclays is ahead of the game in reporting this to the FSA and also in terms of being investigated, there is more to come here."
- Philip Booth, programme director at the Institute of Economic Affairs and professor of Insurance and Risk Management at Cass Business School
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In a statement, Diamond, who faced mounting calls to step down, said he made the decision as the external pressure on the bank has reached a level that risks "damaging the franchise".
"My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as chief executive," said Diamond.
"The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen," he added.
George Osborne, the UK chancellor of the exchequer, welcomed Bob Diamond's decision and said he hoped it was the "first step towards a new culture of responsibility in British banking".
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"The regulators are in the pocket of the banking industry but if they find someone doing something wrong, there is no real deterrent, there is no penalty. Barclays will pay some kind of fine but of course to pay for the fine they will continue to engage in manipulation, in market manipulation of fraud. That's their business model, that's what their shareholders expect, that's what the City of London expects."
- Max Keiser, an American filmmaker and former equities broker
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Barclays bank was fined a record $450m last week for attempting to manipulate the London interbank offered rate, Libor, during the financial crisis between 2005 and 2009.
Libor is a measure of how much banks have to pay to borrow from their rival and is worked out every day from estimates submitted by the major banks of their own interbank lending costs.
Banks that help set interbank lending rates have been scrutinised by various regulatory bodies for years - their function precisely being to watch for manipulations in the Libor and similar rates.
In the UK the Financial Services Authority (FSA) regulates providers of financial services. So far the financial watchdog has found only one bank guilty of misconduct after repeated warnings in the past five years of irregularities in how Libor is set.
The European Commission has also been investigating fraud on interbank rates. The EU Antitrust regulators say they are now "intensifying" scrutiny on financial markets but are yet to declare any irregularities.
Libor and its European equivalent Euribor are regarded as key benchmark rates throughout the world, impacting on virtually every currency, not just euro and sterling.
So how widespread is this financial deception? And should an international body be regulating the regulators of a system that appears to assume everyone acts honestly?
Inside Story, with presenter Mike Hanna, discusses with guests: Philip Booth, a programme director at the Institute of Economic Affairs and professor of Insurance and Risk Management at Cass Business School; Richard Reid, the chief economist at the Centre for Financial Regulation (ICFR); and Max Keiser, an American filmmaker and former equities broker.
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"I think Bob Diamond's made the right decision for Barclays, also the right decision for the country, because we need our banks focused on lending to the economy not on the scandals of the past and I hope this can be the first step towards a new culture of responsibility in British banking which is what the British public very much want to see."
George Osborne, UK chancellor of the exchequer
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FACTS ABOUT THE LIBOR SCANDAL:
- Barclays bank chief executive Bob Diamond resigned on Tuesday
- Diamond: External pressure risked damaging the franchise
- Barclays chairman Marcus Agius resigned after rate-fixing scandal
- The governor of the Bank of England called for change in banking culture
- Agius and Diamond have to answer questions from MPs on Wednesday over the scandal
- Cameron ordered an inquiry into interbank rate scandal
- Barclays, Britain’s second largest bank, was fined $450m for the fraud
- Traders at Barclays and several other banks had rigged the interbank rate
- Libor is the rate at which banks borrow funds from lenders
- More than a dozen international banks implicated in the rate fraud
- The Libor rate-fixing scandal is likely to spread beyond the UK
- Libor is used as a benchmark to decide the value of global financial products
- Royal bank of Scotland has also sacked four traders over Libor
- Evidence dating back to 2005 shows that Barclays tried to fix dollar Libor
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