The drama now playing out in the LIBOR-fixing scandal appears to be catching stride. I ran across an excellent New York Times DealBook post recapping the state of play and what large banks, I think sixteen in total, are likely to encounter in the weeks and months ahead as the grip of regulatory reckoning fully takes hold.
Two interesting things from our perspective. First, the initial thinking was concern over what might necessarily become a virtual house cleaning of top bank officials at firms involved. If Barclays is the metric, CEOs and board chairs at their firms were apparently on the chopping block. That calculus is being scaled way back as it becomes clear such “tone at the top” symbolism may actually create a rather severe systemic risk for the industry. Completely removing the A-team is not an option. It appears the only heads to be chopped will be deeper down in the organization, the “hands-on” players, as it were.
Secondly, what is interesting to us about this LIBOR parade is that it has completely lapped the financial crisis. It seems it has fully refocused the regulatory/legal enforcement effort from the many malefactors implicated in the earlier financial crisis, ranging from fraudulent mortgage bundlers and bogus accounting representations to rampant mis-selling, bogus credit ratings (wait, that number was called recently), and bailout irregularities, to name a few. Those are much more difficult cases, with much less entertaining e-mail trails, to be sure. But you have to wonder, will we ever circle back?