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News, gossip and insight from PoliticsHome Editor Paul Waugh

Little England bites back

Given that the subprime crisis was Made in America, some will think it fitting that American Bob Diamond has finally fallen on his wallet.

Diamond's relationship with Britain is complex. He became a British citizen yet held dual nationality. He loves some of our traditions, but loathes others.

That schizophrenia echoes perhaps the bank's own history: Barclays has been around for more than 320 years, while Barclays Capital has been around since 1997.

Diamond has long thought that the UK authorities and Parliament failed to grasp the global nature of the City's role and his company's clout.

His insouciance at the Treasury Select Committee 18 months ago was notable, particularly his line that 'the time for remorse' from banks was over. Although he publicly later softened that, privately he felt there was nothing he had to be sorry for.

For a reminder of Diamond's frustration with English culture, it is worth re-winding to the hectic days of 2008 and the Lehman's collapse.

He was trying to buy out Lehman's before it went under. But the whole deal went dead when the British FSA decided it couldn't waiver normal rules on takeovers.

Thanks to Andrew Ross Sorkin's excellent book 'Too Big To Fail', we learned that Diamond tapped out the following email on his Blackberry:

"Couldn't have gone more poorly. Very frustrating. Little England."

Well, Little England has bitten back today. Barclays own statement makes clear Diamond had to quit because of 'external pressures' from Parliament, the regulator and the threat of further inquiries. Alistair Darling (who oversaw the FSA snub to Diamond) may be more than a little pleased.

The fact remains that a week after Diamond sent that email, he in fact secured what is widely known as The Deal of the Century. With Lehman's bankrupt, he outfoxed the competition and bought its remaining business for a song. Although Little England had stymied his original plan, in fact he ended up with an even better outcome.

And to underline his curious relations with his adopted home country, when the deal was done, guess which tune rang out on the trading floor of Lehman's (now Barclays) offices in New York? God Save The Queen*.

In the end, the purchase of Lehman's was hugely profitable (helping secure Barclays Capital a $2bn profit that year), but it seems the aggressive American culture had more impact on Barclays than the more genteel English traditions had on the former Lehman's staff.

In what one Barclays trader described as "the goddamnest reverse takeoever you ever saw",  the Lehman culture of "animals" and "killers" was allowed to flourish in the British bank.

It may be that the Libor rate-rigging was just another example of a culture that went wrong. The elevation of Diamond from BarCap to Barclays itself was perhaps proof that the bank itself had been Americanised.

We in this country have long had a difficult relationship with US capitalism. Its go-getting nature is admired and seen as vital in shaking up the old boys club atmosphere of the City of old. But the downside may have been a Wall Street-style aggression and hubris that made Gordon Gecko look mild.

I wonder if the next Barclays CEO will be from Stateside? Or will he be English?

 

 

 

*FOOTNOTE: This is revealed in Tom Junod's wonderful Esquire piece from 2009.

Junod also has a wonderfully ironic line about Diamond's habit of getting up and leaving meetings whenever anyone had any bad news to pass on.

"Who wants to hear bad news?" he would say. Well, the news ain't rosy today...

 

 

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