Jerry del Missier, Sudbury born and Queens educated, received a $14 Million payout (GBP 8.75 million) when he resigned this month after serving only a few weeks as COO of Barclay’s Bank in London. Del Missier and his boss Bob Diamond both left Barclays after it was charged that they had participated in rigging the LIBOR (London Internbank Offered Rate) index—an index used to determine interest rates the big British banks pay on their loans. The rate is set weekly in a conference call between 13 large financial institutions who declare what they are paying to get money. The top and bottom declared rates are discarded and an average is worked out using the remaining rates. This rate is then used in financing Billions of dollars of debt. Libor rates are calculated for ten different currencies and 15 borrowing periods ranging from overnight to one year and are published daily at 11:30 am by Thomson Reuters. Many financial institutions, mortgage lenders and credit card agencies set their own rates relative to it. At least $350 trillion in derivatives and other financial products are tied to the Libor. The heads of the US and UK central banks have described as “fraud” the manipulation by Barclays of the international lending rate.
The US Federal Reserve chairman, Ben Bernanke, said the process for setting the rate was “structurally flawed” and that he could not guarantee its reliability. Del Missier was seen as a rising star in international banking. He applied for as job with Barclay’s upon his graduation from Queens in 1985, and received a polite rejection letter. He them started his career in the Bank of Nova Scotia before being hired by a New York Bank which ultimately sent him to London. There, he attracted the attention of Barclay’s brass who hired del Missier and from there he quickly rose through the ranks, becoming COO earlier this year. It is reported he kept the Barclays rejection letter framed on his office wall.