What responsibilities did senior executives at Barclays have to prevent fraud in circumstances that, in Timothy Geithner’s words, created both the incentive and opportunity for fraud? On June 27, 2012, as part of a U.S. Department of Justice investigation, Barclays Bank admitted to manipulating and reporting fraudulent interest rates used in international financial markets. Barclays, a multinational financial services and banking firm headquartered in London, was fined more than $450 million (U.S.) by regulators in both the United Kingdom and the United States. Within a week, Marcus Agius, board chair; Bob Diamond, chief executive officer; and Jerry del Missier, chief operating officer, all resigned.

Evidence showed that Barclays had regularly manipulated the LIBOR (London Inter-Bank Offered Rate) interest rate since at least 2005 in order both to profit from large trades and to falsely portray the bank as financially stronger than it was.

The LIBOR is the rate at which major London banks report that they are able to borrow. This rate then serves as the benchmark at which interest rates are set for countless other loans, ranging from credit cards to mortgages and interbank loans. It also acts as a measure of market confidence in the bank; if a bank must pay a higher rate than others to borrow, then markets must have less confidence in the institution’s financial strength.