It may be a good idea to step back and try to understand what happened here more carefully before starting to bash Barclays as the politicians would have us. F

It may be a good idea to step back and try to understand what happened here more carefully before starting to bash Barclays as the politicians would have us. First, remember it would be very easy to design a system for libor rate setting that was very hard to manipulate. You could require trading to happen via an electronic exchange and volume weighted average price would be libor. The reason we don't have a system like that is because the politicians and regulators prefer it that way, banks have lobbied for an electronic system many times. Second, note that Barclays was consistently filing reports with rates at the upper end of the LIBOR range if not the very highest. Barclays was getting repeated messages through the British old boys network asking it to lower it's filings but was not heeding those calls, which given the pressure put on it was actually commendable behavior. Instead Barclays was publicly pointing out to all who would hear that submissions by other banks were not credible. There is now way for example that Citigroup or RBS was borrowing at lower rates than Barclays, yet they were consistently filing lower reports. Note that during this time the regulatory playbook was all about trying to hide the symptoms of the crisis so that confidence would be restored. Remember the genius move by the SEC to ban shorting of US financial stocks which was followed up by European regulators banning shorting of all stocks. Finally, the assistant treasury secretary tells Bob Diamond that Barclays rates need not be at the upper end of the range consistently. Now the only reason for a call like this is to give Diamond an order to lower rates with plausible deniability. Note also that this whole "scandal" happened because senior Barclays management themselves found issues, hired an outside law firm to investigate and turned over all evidence to the FSA. In light of this the UK serious fraud office wanted to investigate other banks but their funding was cut to prevent this so they abandoned the investigation. The funding was only restored today after the funding cut threatened to become a bigger scandal. Maybe we need to pay more attention to what the politicians are doing and less to what the bankers are doing?