Barclays is being punished for being first, not worst

Barclays came clean while others are still hiding manipulation.

One thing that has come through in Barclays' counter-offensive over Libor-fixing is that it genuinely believes that what it was doing, if not actually ethical, was at least no worse than that which every other bank was doing.

In its submission to parliament, it writes of itself that:

The bank’s exceptional level of cooperation was expressly recorded by each of the Authorities, and was described by the DoJ as "extraordinary and extensive, in terms of the quality and types of information provided" and "the nature and value of Barclays cooperation has exceeded what other entities have provided in the course of this investigation." That cooperation has led to Barclays being the first to reach resolution of these issues. It ironic that there has been such an intense focus on Barclays alone, caused by our being first to settle in the midst of an industry-wide, global investigation.

Similarly, in Bob Diamond's record of his phone call with the Bank of England's Paul Tucker, we learn (as well as the fact that Diamond goes by RED, for Robert Edward Diamond, in internal memos) that Barclays genuninely believed the reality of Libor was that:

Not all banks were providing quotes at levels that represented real transactions.

This belief – that other banks have been manipulating Libor as well – is not some desperate attempt by Barclays to divert attention. We already know that RBS had to fire at least four, and possibly as many as ten, traders over Libor manipulation, and it seems likely that many other banks were doing the same thing. Indeed, if Barclays are to be believed, the only reason the call with Tucker happened at all was because they were manipulating Libor less than the other banks. This chart, via Reuter's Jamie McGreever, shows Barclay's spread over the Libor rate:

Notice the spike in Barclays' borrowing costs in September 2008, settling down almost entirely by December of that year. The Bank of England apparently thought that was because the market considered Barclays to be riskier than most banks; Barclays believed it to be because the other banks were lying more than it was. (The answer, of course, is likely somewhere in the middle.)

It may still be true that Barclays was qualitatively worse. There is no hint – yet – that the lies from RBS went any higher than trader level, whereas Barclays' Chief Operating Officer resigned yesterday as it became apparent that he may have directly ordered subordinates to under-report Libor rates, based on a mis-understanding of Tucker's phone call.

But it is undoubtedly the case that the reason Barclays is getting the most trouble – the reason why all subsequent investigation has focused on them, and they have had two waves of high-profile resignations – is because they were the first to be fingered. And they were only first because they held their hands up and admitted culpability. The authorities are, after all, still investigating other banks.

It may well turn out that what Barclays was doing was in no way unique. Now, if that results in the CEOs of all major banks being hounded out and potentially prosecuted for their actions in the run-up and immediate aftermath of the financial crisis, then it's been a long time coming. But it seems far more likely that what will happen is that by the third or fourth bank, the excuse that "everyone was doing it" will start to hold water. The failure will be seen as systematic, and worthy of investigation, but not of any extra punishment beyond the reforms which will be suggested then half-heartedly implemented on the industry. The chief executives who participated in cover-ups will get off.

What lesson does this teach banks and businesses in the future? Do not co-operate. Do not reveal anything to the authorities. If you hold your hands up and admit blame, you will be pilloried, but if you bury your wrongdoings until someone else is found out, you'll get away scott-free.

That doesn't seem to be the best idea.

Barclays bank, being punished worst for coming clean first. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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A swimming pool and a bleeding toe put my medical competency in doubt

Doctors are used to contending with Google. Sometimes the search engine wins. 

The brutal heatwave affecting southern Europe this summer has become known among locals as “Lucifer”. Having just returned from Italy, I fully understand the nickname. An early excursion caused the beginnings of sunstroke, so we abandoned plans to explore the cultural heritage of the Amalfi region and strayed no further than five metres from the hotel pool for the rest of the week.

The children were delighted, particularly my 12-year-old stepdaughter, Gracie, who proceeded to spend hours at a time playing in the water. Towelling herself after one long session, she noticed something odd.

“What’s happened there?” she asked, holding her foot aloft in front of my face.

I inspected the proffered appendage: on the underside of her big toe was an oblong area of glistening red flesh that looked like a chunk of raw steak.

“Did you injure it?”

She shook her head. “It doesn’t hurt at all.”

I shrugged and said she must have grazed it. She wasn’t convinced, pointing out that she would remember if she had done that. She has great faith in plasters, though, and once it was dressed she forgot all about it. I dismissed it, too, assuming it was one of those things.

By the end of the next day, the pulp on the underside of all of her toes looked the same. As the doctor in the family, I felt under some pressure to come up with an explanation. I made up something about burns from the hot paving slabs around the pool. Gracie didn’t say as much, but her look suggested a dawning scepticism over my claims to hold a medical degree.

The next day, Gracie and her new-found holiday playmate, Eve, abruptly terminated a marathon piggy-in-the-middle session in the pool with Eve’s dad. “Our feet are bleeding,” they announced, somewhat incredulously. Sure enough, bright-red blood was flowing, apparently painlessly, from the bottoms of their big toes.

Doctors are used to contending with Google. Often, what patients discover on the internet causes them undue alarm, and our role is to provide context and reassurance. But not infrequently, people come across information that outstrips our knowledge. On my return from our room with fresh supplies of plasters, my wife looked up from her sun lounger with an air of quiet amusement.

“It’s called ‘pool toe’,” she said, handing me her iPhone. The page she had tracked down described the girls’ situation exactly: friction burns, most commonly seen in children, caused by repetitive hopping about on the abrasive floors of swimming pools. Doctors practising in hot countries must see it all the time. I doubt it presents often to British GPs.

I remained puzzled about the lack of pain. The injuries looked bad, but neither Gracie nor Eve was particularly bothered. Here the internet drew a blank, but I suspect it has to do with the “pruning” of our skin that we’re all familiar with after a soak in the bath. This only occurs over the pulps of our fingers and toes. It was once thought to be caused by water diffusing into skin cells, making them swell, but the truth is far more fascinating.

The wrinkling is an active process, triggered by immersion, in which the blood supply to the pulp regions is switched off, causing the skin there to shrink and pucker. This creates the biological equivalent of tyre treads on our fingers and toes and markedly improves our grip – of great evolutionary advantage when grasping slippery fish in a river, or if trying to maintain balance on slick wet rocks.

The flip side of this is much greater friction, leading to abrasion of the skin through repeated micro-trauma. And the lack of blood flow causes nerves to shut down, depriving us of the pain that would otherwise alert us to the ongoing tissue damage. An adaptation that helped our ancestors hunt in rivers proves considerably less use on a modern summer holiday.

I may not have seen much of the local heritage, but the trip to Italy taught me something new all the same. 

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear