Bloomberg View: Something's Rotten in Banking, and It's Not Just Barclays

You might have missed the latest bank scandal, the one involving Barclays, in the hubbub of the U.S. health-care ruling and the euro salvage plan. If so, here’s what you need to know: On June 27, Barclays, the U.K.’s second-largest bank by assets, admitted that it deliberately reported artificial borrowing costs from 2005 to 2009. The false reports were used to set a benchmark rate, the London interbank offered rate, or Libor, which affects the value of trillions of dollars of derivatives contracts, mortgages, and consumer loans. The bank agreed to pay a hefty $455 million to settle charges with U.S. and U.K. regulators, and on July 2, Chairman Marcus Agius resigned.

On July 3, Chief Executive Officer Robert Diamond also resigned. Agius then reversed his decision to quit; he will stay on to lead the search for a new CEO. In an apology to employees before he stepped down, Diamond wrote that some of the misconduct occurred on his watch, when he was head of Barclays Capital, the investment-banking unit. Diamond was already in the doghouse with investors: In April, 27 percent of shareholders, upset that Barclays had missed profit targets, voted down his $19.5 million pay package.