It is not very often that two ‘gods' give up their secrets in just one day - and it was too much to hope that would happen yesterday.
It is not very often that two ‘gods’ give up their secrets in just one day – and it was too much to hope that would happen yesterday.
One did. In Switzerland, the elusive Higgs boson particle – colloquially called the ‘God particle’ – finally admitted it existed, to two teams of scientists at the Large Hadron Collider in Cern, who revealed their discovery yesterday. The particle is a fundamental building block of our universe.
The second ‘god’ – derived from the nickname he earned in the 2008 crisis as one of the banking ‘Masters of the Universe’ – was Bob Diamond. Until Tuesday he was CEO of Barclays, and UK parliamentarians in London put him under the microscope yesterday, but he proved somewhat more elusive.
He disgorged many important facts about the artificial lowering of Libor rates, as quoted to the British Bankers Association by traders at Barclays, in the crisis.
In the end, Diamond and Higgs boson have one important thing in common. They both ran rings around their investigators – in Cern the particles did it literally, at near light-speed around the LHC’s 27-kilometre circuit.
In London, Diamond did the same – albeit metaphorically and deftly – around his eager inquisitors.
Yes, Diamond said he was sorry, and disappointed, and angry about the rogue traders’ actions, and felt “physically ill” when he read their bragging emails to one another. But they did not stand for all Barclays employees, nor even “a couple of thousand” other traders, he quickly added.
Manipulating Libor quotes was “reprehensible” – but Diamond feared the government may nationalise Barclays, and its £6.7bn equity raising might fall through, if it was rumoured to be too weak, and importantly, weaker than rivals.
Each contrite statement Diamond made was followed yesterday by a ‘but….’
And Diamond failed to answer one key question, or rather, the panel did not ask it.
He did not explain why lowering Libor rates would directly benefit the traders from submitting those rates.
This was important, because he said categorically the traders were “acting on behalf of themselves, I do not think they had any interest in benefiting Barclays”.
But Diamond’s testimony made it very clear how manipulated rates would help their bank – better perceived stability, easier fund raising, less risk of being nationalised – and the panel noted Barclays’ rogue traders would shout across the room if everyone was happy with the lower quote they were about to submit.
The impression remains the traders were lowering Libor to help their bosses, not necessarily only themselves. If this is the case, their actions remain a problem for Barclays, if not also the UK bank system more widely.
Yesterday Professor Peter Higgs, who correctly predicted about 50 years ago the existence of the ‘God particle’ now named after him, cried when he addressed an audience in Cern. “I never expected this to happen in my lifetime and shall be asking my family to put some champagne in the fridge,” he said.
Barclays’ Master of the Universe may feel the same way, minus the champagne. But it will be those who wanted fuller answers from him yesterday who will be crying today, at an opportunity lost.