If you want to understand the City, think of it as run on the corrupt model of the public school. That was my first comment on LIBOR. Here was my analysis then:
".. once you realise that there is connivance in your lying - that far from being called out, it seems that everyone who matters knows just what is going on, then why not use the same small lies for even small matters of profit, and not just in extremis? And that, it turns out, is just what Barclays had been doing."
So no great surprise that the senior prefect, caught in flagrante, should now be self-righteously proclaiming that he had permission from the top to do his dirty work: "you've been nodding and winking as a matter of course all these years ... you know neither I nor any other prefect strictly follows the rules ... so how can you blame me for my behaviour, especially since the 2008 incident was lying to save the system rather than lying to line my pocket ... which, by the way, was being done unbeknownst to me by the junior boys ... whom I did have charge of ... but you know, you've been there ... young bucks will be bucks ...."
(The proclamation of extenuating circumstances, complicity, etc, is well worth a read. It is here. Even its preamble has all the classic hallmarks of the well-rehearsed schoolboy's apology: "These explanations are in no way intended to excuse any of the events that occurred. These events should never have taken place, and Barclays deeply regrets that they did". Lesson 1: give an excuse while denying it's an excuse; claim it's just an explanation.)
As the LIBOR scandal descends into a political scandal, let's remember that the question is not whether the Westminster/Financial complex was complicit - of course it was complicit! The point is precisely that this is the nexus we need to dismantle to have a healthier politics and a healthier finance.
There is a special irony to the complicity of this case. The LIBOR fix was perpetrated days before a massive Qatari Sovereign Wealth Fund injection of capital into Barclays. Without it, Barclays may well have gone the way of RBS - into the public sector, that is. With it, Barclays has claimed ever since that it should not be penally regulated as the other banks have been because it did not take any public money.
In other words, without that lie, the public might well now be in a much stronger position to actually disentangle the shady collusion between politics and finance in this country.
There always used to be a strong distinction made in the police force between those who were "bent for themselves" or "bent for the job". The first was reprehensible, the second should be allowed by any sensible, self-respecting body. Diamond is now trying to claim that the early (pre-2008) practice of LIBOR fixing is just a matter of traders increasing their bonuses ... so as long as they are punished for being "bent for themselves", and as long as he is vindicated as having been "bent for the job" in 2008, everything can carry on as usual. I am sure he expects to be back in charge of Barclays once everyone has seen the sense of this defence.
But it doesn't stand up and nor should it. Our response should be that we, on the outside, don't want them to be bent at all. The traders made money from the fix because it also made Barclays money - the whole point of leveraged compensation packages is to make the distance between the "self" and the "job" disappear. And Diamond's "bent for the job" defence for the 2008 behaviour is simply an indictment of the job he's doing. If today's finance needs the ignoble lie to survive, we need to find an honest replacement.