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A Diamond in the rough

<p>As financial scandals go, this week's Barclays fiasco is just ugly.</p>
Bob Diamond, disgraced former Barclays CEO and Mitt Romney pal
Bob Diamond, disgraced former Barclays CEO and Mitt Romney pal

As financial scandals go, this week's Barclays fiasco is just ugly. But even if you don't care at all about British finances, there are domestic angles to the controversy.

Libor, the London interbank offered rate, is a standard interest rate for loans between banks. It serves as a benchmark for more than $10 trillion in lending to businesses and consumers worldwide. In the United States, it is linked to the interest rates on student loans, credit cards and even some mortgages.But London-based Barclays, one of world's largest banks, admitted last week that it schemed to rig the benchmark rate during the financial crisis. On Tuesday, the bank's chief executive, Bob Diamond, its chairman, Marcus Agius, and its chief operating officer, Jerry del Missier, resigned. The bank also released documents implying that England's central bank was involved in the plan. [...]That the controversy has infiltrated the highest levels of British finance suggests that the cracks in Libor may run deeper than previously thought.

For Americans, the scandal could certainly prove problematic. After all, Libor's credibility has global reach, and its manipulation by Barclays undermines confidence in a metric that was believed to be entirely credible. What's more, the Washington Post report added that the U.S. Justice Department "is investigating other banks" as part of the larger probe.

But there's a political element, too -- Barclays's disgraced CEO, Bob Diamond, allegedly at the heart of the Libor scandal, is a leading fundraiser for none other than Mitt Romney. In fact, while President Obama isn't going to Europe for a fundraising, his Republican challenger is -- Romney will be rewarded with a high-priced fundraiser in London later this summer, and Diamond was supposed to be one of the event's leading hosts.

This week, Diamond quietly backed out of the Romney fundraiser, choosing instead to focus his energies on not going to jail. As Slate joked, "Wealthy investment bankers are great fundraiser hosts during your campaign for president -- unless they just resigned in scandal."

The larger takeaway for Americans is pretty obvious: Romney, if elected, intends to eliminate safeguards and layers of accountability for the financial industry, benefiting guys like his buddy Bob Diamond.