Britain's bad banking

Britain's NatWest Bank put advertisements in the UK press yesterday, apologising for the “technical issues” which have caused widespread dislocation to many of its essential services for customers and promising that “no customer will be permanently out of pocket as a result of this problem”. But another UK bank was in much deeper trouble yesterday -- Barclays was fined a total of 290 million pounds by the UK's Financial Services Authority and two United States regulatory authority for lying -- it's the only word that will do -- about the cost of their inter-bank interest rates with the result that benchmark rates used by countless other people were distorted. The amount in play in a five year period was 550tn pounds. The statement by the regulatory authorities said: “Barclays tried to manipulate and make false reports concerning its interest rates to benefit its derivatives trading...The conduct was regular and pervasive.” The immediate news from Barclays was that its Chief Executive Officer, Bob Diamond, will forgo his bonus in 2012, but it will take a bigger gesture than that for Barclays to emerge from this scandal without its reputation in shreds -- the investigative authorities reported that instructions for the misleading information to be given came from the Bank's “senior managers”. Presumably Barclays, unlike NatWest, will not be promising that “no one will be out of pocket as a result of this problem.”