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Barclays Libor Scandal: Britain Hopes for "New Culture" of Banking

The Barclays Libor scandal involving price fixing of key interbank lending rates has already led to two major resignations at the bank, and has increased scrutiny on the global financial industry.

Barclays (NYSE ADR: BCS) last week was slapped with a $456 million fine for rigging Libor rates, the rates banks charge each other for loans.

The record fine was levied to settle an investigation into attempted manipulation and false reporting related to two benchmark interest rates. Those rates help determine terms of loans and financial contracts around the world that form the basis for hundreds of trillions of dollars' worth of transactions.

The news has been a major blow to Barclays' once stellar reputation, and now led to the fall of Chief Executive Officer Bob Diamond.

Barclays CEO Diamond Resigns

Diamond resigned Tuesday, a day after Chairman Marcus Agius stepped down amid the scandal.

"The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen," Diamond said in a statement Tuesday.

Agius took the blame Monday, acting as the fall guy. He said in a statement, the "buck stops with me, and I must acknowledge responsibility by standing aside."

Then a pressured Diamond announced he would leave, and Britain's politicians and regulators labeled this the first step towards "a new culture of British banking."

Scores of shareholders lobbied for Diamond to take responsibility.

John Mann, a Labour politician and among the panel of lawmakers who this week will question Diamond and Agius, said Monday on Sky News, "He (Diamond) must resign. He"s got to go. There is no role for people like him if banking is to be trusted again in this country and if British banking is to restore its tarnished reputation in the world, which of course is of great importance to our economy."

Agius will lead the bank temporarily and help search for a new CEO.

Barclays' board, trying to do some damage control, announced it would begin an audit of the financial services firm's business practices.

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