As Punishment for Liborgate, Barclays Must Act Like a Goody-Goody

Receiving Wide Coverage ...

Sick of Liborgate Yet? We know some readers are, and we’re starting to feel some fatigue too. But the scandal continues to dominate headlines, and if you cut through the salacious trader emails (admittedly a good bit of fun) and the sometimes sanctimonious commentary, it is undeniably an important story that touches on so many of the big issues in financial services today: regulators’ proper role, reputational risk, client trust, etc. The most original angle we saw on our rounds this morning comes from the FT: There’s an unusual provision in Barclays’ settlement with the U.S. Commodities Futures Trading Commission, under which the U.K. bank, in addition to the usual monetary penalty and promise to revamp compliance, also agreed to “take on a role as an advocate for increased oversight for the industry.” Barclays will “encourage” the British Bankers Association and other publishers of interest rate benchmarks to reform the processes for Libor and other indexes. The FT frames this as “the latest example of the controversial practice of using enforcement pacts as a road map to change compliance,” of which the 2003 Wall Street research settlement may be the most famous example. The comment thread on this article is rich, too, e.g. this suggestion for making Libor more accurate: “A revised method could be adopted whereby the rate of borrowing polled is combined with a rate at which a willingness to lend is derived from a separate group and the ZOPA is used to establish the Libor.” (We are pretty sure that by “ZOPA” the commenter is referring to the negotiation concept “zone of possible agreement” and not recommending that the British peer-to-peer lending pioneer Zopa should get involved.)

Most of the other headlines today are pretty self-explanatory:

Britain’s “embattled” regulator, the Financial Services Authority, is “Under Fire for Libor Policing,” or lack thereof. Wall Street Journal

“Traders' Messages Provide Grist for Investigators,” and not just at Barclays: Royal Bank of Scotland, for example, is fighting a court order to hand over emails. Wall Street Journal

We’re definitely sick of gemological puns. “Barclays Unlikely to Sparkle Even After Diamond's Departure.” Wall Street Journal

“Barclays Bank Bash”: The Journal editorial page casts a skeptical eye on the evidence presented against Barclays. Those seemingly damning emails, the editorial suggests, “given appropriate context, might represent mere humor or Master-of-the-Universe bravado. And we can almost guarantee that this case will prove to be less simple than the media consensus that a culture of corruption in banking has now been proven.”