Marcus Agius, the chairman of Barclays, resigned on Monday, saying "the buck stops with me." His was the first departure since the British bank agreed last week to pay $450 million to settle findings that, from 2005 to 2009, it had tried to rig benchmark interest rates to benefit its own bottom line.
Mr. Agius was right to go and the bank's chief executive, Robert Diamond Jr., should follow him out the door. But the investigations cannot stop there.
The rates in question -- the London interbank offered rate, or Libor, and the Euro interbank offered rate, or Euribor -- are used to determine the borrowing rates for consumers and companies, including some $10 trillion in mortgages, student loans, and credit cards. The rates are also linked to an estimated $700 trillion market in derivatives, which banks buy and sell on a daily basis. If these rates are rigged, markets are rigged -- against bank customers, like everyday borrowers, and against parties on the other side of a bank's derivatives deals, like pension funds.
Barclays is only one of more than a dozen big banks that provide information used to set the daily rate for Libor and Euribor. The settlement, struck with regulators in Washington and London and with the Department of Justice, indicates that the bank did not act alone. It shows that unnamed managers and traders of Barclays in London, New York, and Tokyo colluded with or prevailed upon bank employees who provide the benchmark data to make false reports. The aim was to bolster Barclays' trading positions and to aid or counteract other banks' attempts at manipulation.
The evidence, cited by the Justice Department -- which Barclays agreed is "true and accurate" -- is damning. "Always happy to help," one employee wrote in an e-mail after being asked to submit false information. "If you know how to keep a secret, I'll bring you in on it," wrote a Barclays trader to a trader at another bank, referring to an attempt to align their strategies for mutual gain.
If that's not conspiracy and price-fixing, what is?
The Justice Department has left open the possibility of prosecuting officers or employees of Barclays. But it has agreed not to prosecute the bank itself, in part because Barclays was the first to cooperate in the investigation and has agreed to keep cooperating. Such an agreement makes sense only if that cooperation will allow prosecutors to nail other banks that have been involved in setting the rates, including potential cases against Citigroup, JPMorgan Chase, and HSBC, and people who work there.
To date, the Justice Department has not distinguished itself in prosecuting major banks or their executives for conduct leading up to and during the financial crisis. But with Barclays now cooperating, the "Libor scandal" is another chance for government prosecutors to unmask and punish financial wrongdoing.