Barclays CEO Diamond slammed for inadequate defense of banks as "good citizens"

Barclays Capital, which bought naming rights to the Atlantic Yards arena that the state gave away, has come in for a bit of criticism of late.

In Barclays’s New Tune, published in the New York Times 11/7/11, Reuters' BreakingViews observed:

Robert E. Diamond Jr., Barclays’s chief executive, has discovered humility. Ten months after he declared that the period for banks to show remorse was over, he has acknowledged the need to rebuild trust. Though the change of tone is refreshing, he must now demonstrate that reality reflects the new ideal.

Mr. Diamond’s attempt to place banking in a broader social context is welcome — and overdue. His thoughtful lecture on Nov. 3 offered a defense of how and why banks take risks...

That said, many of Barclays’s past actions are hard to reconcile with Mr. Diamond’s newly stated tests of serving social purpose and meeting real client need. Consider the mortgage borrowers who were persuaded to take out superfluous payment protection insurance. Or the Barclays unit that specialized in structuring aggressive tax arbitrage schemes. And while a court in March dismissed a claim that Barclays had mis-sold derivatives to a small San Marino bank, the case raised questions about whether the lender put its client’s interests first. Mr. Diamond’s credibility will depend on how he goes about stamping out such behavior.

Regaining public trust requires two other big changes. First, taxpayer bailouts must end... The second issue is pay.

More criticism

The above criticism was rather gentle compared to that in the UK press. Regarding pay, The Guardian's Nils Pratley observed:

Diamond's response was wholly inadequate for a chap who is seeking to present himself, Barclays and his industry as capable of being "good citizens". Asked about his own pay, he said "it's not about me." Asked about pay at Barclays, he merely rolled out the familiar line about the need to balance "responsible" behaviour with the need to remain competitive.

I pointed out in March how the astonishing sums earned at Barclays last year (231 key staff earned an average of £2.4m each; Diamond's right-hand men Jerry del Missier and Rich Ricci got £10m each) were earned in a lousy year for the bank.

In the UK magazine MoneyWeek, Merryn Somerset Webb called it "a stunningly patronising lecture" and observed:

Saga's Paul Lewis pointed out that most people judge the banks not just on their role in the destruction of the global economy, but on the way they treat them on the high street. He then said that he saw little evidence of good citizenship there. That, of course, is because there isn't much.

Instead, there is an oligopolistic gang of huge corporates doing their utmost to remove as much money from as many people as possible.