Bet on this: The Treasury Select Committee is going to at least make an attempt to drag Bob Diamond back before it to answer questions.
The impression the former Barclays chief executive gave when he appeared before the committee last week was that relations between the bank and the Financial Services Authority (FSA) were harmonious and all was sweetness and light.
“The FSA was happy with us,” said Mr Diamond at one point, during exchanges about Barclays’ relationship with the regulator.
Now we know that this was anything but the full story.
This morning we have found out that relations were anything but good, and this was spelled out in letters from the FSA’s chairman Lord Turner to Barclays chairman Marcus Agius.
In one particular letter Lord Turner complained that Barclays “continually seeks advantage from complex structures or favourable regulatory structures” that Barclays sought to “spin messages in an unhelpful fashion” and that Barclays’ habit of moving hedges, or derivatives, around the bank had ““used up our resource and goodwill”.
That is about as serious as you can get. Indeed, the language is inflammatory.
While the FSA approved Mr Diamond’s appointment, it did raise some concerns pressing Mr Agius to make sure Mr Diamond took a step back from the investment bank Barclays Capital. The watchdog also wanted to be sure that Mr Diamond was willing to “exercise appropriate oversight” over Barclays Capital, which he had previously run, and Jerry del Missier, his number two there “in particular”.
Well we all know that this didn’t exactly happen: The latter authorised Libor interest rate fixing after misinterpreting a note of a conversation between Mr Diamond and Bank of England deputy governor Paul Tucker. And yet the two men never discussed the note or its implications.
Mr Agius has confirmed that he discussed the letters with Bob Diamond and that they were discussed at Barclays board.
And yet during Mr Diamond’s session last week no hint of the tension between company and watchdog was given.
As committee chairman Andrew Tyrie said, Mr Diamond appeared not to remember any of it. If he did, he certainly didn’t bring it up before the committee despite having been questioned at length by MPs about relations between himself and the regulator.
The committee is clearly furious, and perhaps they have a right to be. Mr Diamond was described as behaving like “Geoffrey Boycott” when he gave evidence.
That was because he appeared to playing a blocking shot to every ball bowled at him.
But yesterday’s session made it clear that what Mr Diamond did went beyond blocking. And one has to ask whether he would have behaved like that before a congressional committee back in the US.
One thing Mr Agius did confirm was that Mr Diamond quit because he had “lost the confidence of his regulator”. No kidding.
Perhaps Mr Diamond hoped that giving up a maximum £20m in deferred bonuses might take the edge off all this. There's scant chance of that now.
One point to make is that apparently Barclays director Alison Carnwath opposed Mr Diamond’s £2.7m bonus for 2011 - a year in which Barclays missed Mr Diamond’s targets and was described as moderate by him.
She would be the chairwoman of the bank’s remuneration committee, and I’ve been fiercely critical of her as a result of the decision to pay up.
While she carries the can for the bank’s pay policies by dint of her position, perhaps I have been a bit harsh. Ms Carnwath was clearly in the right over the issue. But this raises a question: what on earth were those who over-ruled or out voted her thinking?
They have brought opprobrium down on the bank as well as her head and done a pretty poor job for shareholders. They have some serious thinking to do, I feel.
Marcus Agius has made an interesting point. When the announcements of the fines and the results of the regulators’ investigation into Libor fixing were announced, Barclays didn’t feel the need for resignations. If there was a message given by the regulators, the bank’s directors certainly didn’t hear it.
Mr Agius says in the days between that and Mr Diamond’s resignation: “The attitude of the regulatory authorities changed.”
So, is he saying here that the regulators reacted to public pressure having not initially felt Mr Diamond should go? Or did the Barclays board simply misinterpret what regulators were saying in the first place.
It seems that the misinterpretation of what people say, if that is the case, is becoming something of a theme in this case. It is certainly the case that the committee needs to hear from both Lord Turner and the Bank of England’s governor Mervyn King. And quickly.
Are we at the tip of the iceberg here? Another good point raised at the committee. What was happening at other banks? This is the big unanswered question that hangs over this whole affair. Mr Agius says he does not know, and he wouldn’t be expected to know. Banks talk to each other, but they are hardly going to wash their dirty linen in front of their competitors. But we do know that a lot of banks remain under investigation and Mr Diamond, for one, has pointed out that Barclays was given credit for oo-operating with the watchdogs.
It seems that the longer this scandal goes on the worse it gets. It’s certainly going to have a big impact on those parts of Barclays that weren’t involved, and that means most of the bank. Suddenly those people are going to understand how their colleagues at RBS have been feeling.
Meanwhile confidence in the whole sector is taking quite a knock. The regulators have good cause to be worried. The other banks even more so.