Excerpt From MP John Mann and Bob Diamond's Testimony - A Mackie Messer Moment

Here is an extended excerpt from Bob Diamond's Testimony to Parliament. It is the portion in which he is questioned by MP John Mann.

Here the video of the entire testimony.  John Mann's portion begins at 2:10.
The MP's forgot to ask Mr. Diamond for his advice  and indulgence on how better to run the country.   In this their American counterparts have the definite leg up. 

But then again, Diamond is no Dimon. 

Q264 John Mann: Before I ask my questions, I just wonder, Mr Diamond, if you could remind me of the three founding principles of the Quakers who set up Barclays?

Bob Diamond: I can’t, sir.

Q265 John Mann: I can help, and I could offer to tattoo them on your knuckles if you want, because they are honesty, integrity and plain dealing. That is the ethos of this bank that you have spent two hours telling us is doing so well-in fact, from what you have told us, doing so well that I wondered why you had not received an extra bonus rather than the sack.

You have told us that, as I understand what you are saying, it is right that there is a criminal investigation. Some people among the people that you employed may therefore go to prison. You have told us that other banks were doing the same thing. I understand from what you are saying that you are telling us that you never questioned or analysed the rates that were reported between 2005 and 2008 and that you never discussed at a senior level the possibility of your traders misreporting or misrepresenting. Is that accurate?

Bob Diamond: First, in terms of honesty, integrity and plain dealing, that is how I have behaved in my entire career in the business, so I agree with that, and that doesn’t mean that I knew or was aware of the bad behaviour. As soon as I was aware, I did what I could to make sure that it wasn’t there, so if there is an inference that Barclays is anything other than interested in honesty-

Q266 John Mann: In 2005 to 2008, you never questioned, you never analysed and you never asked about any kind of misreporting by anyone in the bank. That is the case, isn’t it?

Bob Diamond: No one was aware of any misreporting.

Q267 John Mann: You never asked. Did you ever read anything externally of other people suggesting that there might be some misreporting?

Bob Diamond: I think there were, as I said, reports that came out, probably in 2007-08 not 2005-06, but they were on the different issue of whether people were submitting appropriate LIBOR. That is more similar to the issues that we faced during the financial crisis. I was not aware of any reports on traders manipulating the submissions.

Q268 John Mann: You weren’t aware of anyone suggesting that? Nobody came to you, not even those people who had refused to act criminally but had been asked to do so? You said to Mr Garnier that some did and some didn’t. So even those who had refused to act improperly did not come and tell you-that never got to you during that three-year period?

Bob Diamond: Well, they didn’t act improperly.

Q269 John Mann: No, and they didn’t tell you. It does appear strange to the outside world that if people are asked to act criminally-and they choose to do so-by externals as well as internals, they don’t report that to the senior management. I put it to you that that does look rather incredulous to the outside world. You said, to quote your obligation to complete transparency, that "seeing is believing", but you seem to have seen nothing, known nothing and heard nothing in that three-year period.

Can I ask you about the following academic reports? In 1973, the first report into potential misreporting was written by a US academic called Spence. In the period up to 2007 there were a series of reports, and early in 2007 another group of US academics, led by someone called Ewerhart, produced a precise report into this scandal, alleging that it was going on. It did not name Barclays, but alleged that it was going on in companies like yours. That was then repeated by Abrantes-Metz, who has written extensively on it, and by Michaud and Upper. We have a series of academics who are reporting that this is going on; eventually it gets into The Wall Street Journal, and from that, the Fed report something. You’re in charge yet you are not seeing this; you are not reading it. I don’t understand what you are doing.

Bob Diamond: I think that you’ve conflated two separate issues. The issue of the traders and their attempts to manipulate submissions was not part of the report by The Wall Street Journal or the Federal Reserve report. That was about our institutions-

Q270 John Mann: Yes, I’ve read it, but I’m also-the academic reports that led up to that were explicit. You have not read them, but you are the man in charge. You’re getting paid huge bonuses. You are in charge; people are suggesting impropriety from the outside, and you are not even asking questions internally. People who have been told to act criminally are not coming to you to say that they’ve been acting criminally. Either you were complicit in what was going on, or you were grossly negligent, or you were grossly incompetent. That is the only conclusion.

Bob Diamond: Sorry, John, I agree-and I have agreed from the beginning-that the behaviour was wrong. It did not get above the supervisory level for a period of time, and as soon as it did we took action. It is hard to give another answer than that. We keep getting the same question asked.

Q271 John Mann: It’s not that it’s the same question. The point is-

Bob Diamond: We dealt with the activity as soon as we knew about it.

Q272 John Mann: The reason people out there are beginning to agree with me-you said last time, "You don’t really like Barclays do you?" Well, I’m in the more favourable group compared with people out there at the moment. What they are thinking is: hang on a minute, you’re in charge. You’re paid bonuses-£20 million-odd a year in pay and bonuses. You’re the man in charge and the buck stops with you. You are telling everyone that we’ve got to be judged on how we behave when no one’s watching, that we’ve got to have complete transparency and that you can’t work with the company-if someone can’t work with trust and integrity, they can’t be in your team. You are saying all of that. You are getting paid huge bonuses but you haven’t seen any of it. You must have been grossly incompetent in your job during that period of time if you weren’t complicit in this.

Bob Diamond: So, is there a question?

Q273 John Mann: A good question would be to go back to what you said to this Committee last time you were here. You said, "I think it is clear that, if any banking institution got into trouble, where you look first is at the chief executive." The Chairman asked you, "Okay, but how would you lose out?" You replied, "I would assume I would lose out by both losing my job and losing any shares that I had in the company." Will you, therefore, be forfeiting the unvested shares that you have in the company? That is what you told us you would do in this situation.

Bob Diamond: As I said earlier, that is a discussion with the board; I don’t make the decision.

Q274 John Mann: But you are a man who is in favour of consistency. That is what you told us you would do last time you came to the Committee. You have the choice in this. You can take the moral high ground.

Bob Diamond: John, we have been through this a number of times. The investigation of this was market leading. We have a profound issue that is an industry-wide issue, not just a Barclays issue, in terms of LIBOR submissions. I would suggest we wait and see, importantly, what the ramifications of the industry-wide investigation are.

Q275 John Mann: Yes, but the FSA has reported on you and it says that "there were no clear lines of responsibility for systems and controls". You are the man in charge, the man who carries the can, the man who has been paid these huge phenomenal bonuses. You are accepting all the good side-the bonuses-while the people working for you are fiddling the system, potentially some of them going to prison, criminality. You are the man in charge.

You tell us, modestly, that in such a situation you would lose your job-which you have-and that you would lose your shares. That is a pretty small price for you to pay. Have you another suggestion of how you can show some contrition to those Barclays staff across the country and the customers who are wondering and e-mailing me in vast numbers saying, "What do I do with my money? Do I take it out of this rotten, thieving bank?" That is what they are asking me. I am asking you, what are you going to do to put the record straight with your personal behaviour? Because you personally are responsible, either by being complicit or by being incompetent.

Gold Daily and Silver Weekly Charts.

I believe the general manipulation of markets we are seeing now will be traced back to Robert Rubin who formulated a principle of financial activism, or intervention before the fact, as being cheaper and more effective that repairing markets after they suffer a significant decline as Greenspan had done in 1987.

As you may recall the 1987 experience led Reagan to form the President's Working Group on Markets, which grew into the infamous 'Plunge Protection Team' of the 1990's which made generous use of the Exchange Stabilization Fund, an opaque kitty used for general market tinkering.

Treasury Secretary Rubin's favorite tool of choice in the markets was said to be the SP futures since they carry the best 'bang for the buck.'

Apparently LIBOR is quite good on the interest rate side of things as well.


The Federal Reserve is adding Daily Gold Prices to their FRED database.


Perhaps they think the price might become more interesting in the near future, or more deserving of their official concern.

SP 500 and NDX Futures Daily Charts

Lackluster trading day with the usual late day 'pop.'

William L. Shirer, In Time of War and the Life of the Spirit - Murrow and McCarthy

I have had the opportunity to read most of Shirer's works, including Berlin Diary, Rise and Fall of the Third Reich, and The Nightmare Years. I have his work on France in 1940, The Fall of the Third Republic, on my to-be-read list. I have also read a few books about him, that describe him in that milieu of the lead up to the second great war.  I also have a great appreciation of his colleague, Edward R. Murrow.

As an aside, you know I have read and enjoyed the account of the US ambassador to Berlin, In the Garden of Beasts by Erik Larson. I recently picked up a book that caught my eye with a similar name called A Garden of Beasts: A Novel of Berlin 1936 by Jeffery Deaver which was an interesting detective story with a great deal of period detail. I do recommend it if you like that sort of thing and that period.

Shirer is an interesting person. He is the camera that Isherwood thought himself to be, and was not, because he was at heart an artist interpreting reality and searching for his own identity.

Shirer is almost homespun and a typically Midwestern thinker and writer, which is what one might expect from a very good reporter whose purpose is to relay the events, rather than showcase himself. His books are still worth reading.

I recently came across this relatively rare piece of introspection by Shirer and thought I would share it with you.

"It’s rather difficult in these noisy, confusing, nerve-racking days to achieve the peace of mind in which to pause for a moment to reflect on what you believe in. There’s so little time and opportunity to give it much thought—though it is the thing we live by; and without it, without beliefs, human existence today would hardly be bearable.

My own view of life, like everyone else’s, is conditioned by personal experience. In my own case, there were two experiences, in particular, which helped to shape my beliefs: years of life and work under a totalitarian regime, and a glimpse of war.

Living in a totalitarian land taught me to value highly—and fiercely—the very things the dictators denied: tolerance, respect for others and, above all, the freedom of the human spirit.

A glimpse of war filled me with wonder not only at man’s courage and capacity for self-sacrifice, but at his stubborn, marvelous will to preserve, to endure, to prevail—amidst the most incredible savagery and suffering. When you saw people—civilians—who where bombed out, or who, worse, had been hounded in the concentration camps or worked to a frazzle in the slave-labor gangs—when you saw them come out of these ordeals of horror and torture, still intact as human beings, with a will to go on, with a faith still in themselves, in their fellow man, and in God, you realized that man was indestructible. You appreciated, too, that despite the corruption and cruelty of life, man somehow managed to retain great virtues: love, honor, courage, self-sacrifice, compassion.

It filled you with a certain pride just to be a member of the human race. It renewed your belief in your fellow men.

Of course, there are many days in this age of anxiety when a human being feels awfully low and discouraged. I myself find consolation at such moments by two means: trying to develop a sense of history, and renewing the quest for inner life.

I go back, for example, to reading Plutarch. He reminds you that even in the golden days of Greece and Rome, from which so much that is splendid in our own civilization derives, there was a great deal of what we find so loathsome in life today: war, strife, corruption, treason, double-crossing, intolerance, tyranny, rabble-rousing. Reading history thus gives you perspective. It enables you to see your troubles relatively. You don’t take them so seriously then.

Finally, I find that most true happiness comes from one’s inner life; from the disposition of the mind and soul. Admittedly, a good inner life is difficult to achieve, especially in these trying times. It takes reflection and contemplation. And self-discipline. One must be honest with oneself, and that’s not easy. You have to have patience and understanding. And, when you can, seek God.

But the reward of having an inner life, which no outside storm or evil turn of fortune can touch, is, it seems to me, a very great one."

William L. Shirer, A Reporter Quotes His Sources from This I Believe

Foreign correspondent William L. Shirer wrote the acclaimed World War II histories “The Rise and Fall of the Third Reich” and “Berlin Diary.” Shirer reported from numerous European cities including Paris, Vienna and Rome, and had the distinction of being bombed in Berlin by the British and bombed in London by the Germans.

And in addition, here is a famous piece of broadcast journalism by Shirer's colleague, Edward R. Murrow, on one of the episodes that reverberated throughout my early life, the demagogic phenomenon of Wisconsin Senator Joseph R. McCarthy.

"Those who cannot remember the past are condemned to repeat it." George Santayana