Comments re Libor Scandal

Martin Wolf of the Financial Times and formerly a member of the UK’s Independent Banking Commission:

My interpretation of the Libor scandal is the obvious one: banks, as presently constituted and managed, cannot be trusted to perform any publicly important function, against the perceived interests of their staff. Today’s banks represent the incarnation of profit-seeking behaviour taken to its logical limits, in which the only question asked by senior staff is not what is their duty or their responsibility, but what can they get away with.
As my colleague John Kay, has frequently point out, such behaviour, which might seem to be the logical consequence of profit-maximisation, is incompatible with the survival of a sophisticated market economy. Without trust in the probity of those one deals with a host of potentially profitable long-term arrangements will collapse. This is particularly true in banking, Trust is not an optional extra in banking, it is, as the salience of the word “credit” to this industry implies, of the essence.

Dennis Kelleher of Better Markets:

So this isn't about Libor - this is about Lie-More
That seems to be the business model for the big global finance houses.  They like to call themselves "banks," but they aren't banks in any traditional sense.  They are global behemoths that are not just too-big-to-fail, but also too-big-to-regulate and too-big-to-manage.  Take JP Morgan Chase for example.  It has a $2.35 trillion balance sheet, more than 270,000 employees worldwide, thousands of legal entities, 554 subsidiaries and, as proved by the recent trading losses in London, a CEO, CFO and management team that has no idea what is going on in their own bank. 
Let's hope for the sake of the global financial system, the global economy and taxpayers worldwide that Mr. Diamond's resignation is the first of many.  What is needed is a clean sweep of the executive offices of these too-big-to-fail banks, which are still being governed by the same business model as before the crisis:  do whatever they can get away with to get the biggest paychecks as possible.  (Remember, CEO Diamond paid himself 20 million pounds last year and was the UK banking leader insisting that everyone stop picking on the banks.)
Lie-more is just the latest example of why that all has to change and the sooner the better.

 Mervyn King, governor of the Bank of England, “the idea that my word is my Libor is dead.”

Nouriel Roubini: Nobody has gone to jail since the financial crisis. The banks, they do things that are illegal and at best they slap on them a fine.  If some people end up in jail, maybe that will teach a lesson to somebody.  Or somebody hanging in the streets."

Hat tip to Baseline Scenario.