LONDON, UK — The chairman and senior executives of one of Britain's biggest banks have jumped overboard. The government has ordered an inquiry. A multimillion dollar fine has been imposed.
So can we all now sleep safe knowing that banking is secure?
Of course not.
While the decks may have already been mopped at Barclays in the wake of the interest rate scam, Britain's financial sector remains in jeopardy. Even the prospect of more executives from other banks being made to walk the plank is unlikely to win back the trust of an outraged public.
And although the government and the country's leading banks are doing their best to limit the damage, one of the biggest upheavals in a generation could soon unfold in the UK banking industry, both on Main Street and in London's investment powerhouses.
The latest scandal involved the fixing of LIBOR, or the London Interbank Offered Rate. In plain English, this is the interest rate 18 major banks such as Barclays, JPMorgan and HSBC charge each other to lend money. It's calculated by averaging out the borrowing costs of all banks.
In attempting to manipulate the rate by feeding false information between 2006 and 2009, traders at Barclays hoped to make the bank's liquidity levels seem in better shape than they actually were. At the same time, they profited by speculating on the rates they were rigging. (Here's an entertaining, plain-English primer on LIBOR.)
With more than $310 trillion of financial products linked to the LIBOR rate, including certain mortgages, sub-prime loans and mortgage-backed securities bonds, millions of ordinary households may have been affected by the manipulation.
But for many more UK bank customers, the scandal, which comes on the heels of a serious banking glitch that froze millions of accounts for several days last month, is the final straw.
They feel that the bankers, whose failings led to a breathtaking $1.6 trillion taxpayer-funded financial sector bailout at the height of the financial crisis, are still playing games with public money. Anger is directed at all four of the UK's big banks: Barclays, HSBC, Lloyds and RBS.
More from GlobalPost: Barclays CEO Bob Diamond quits
Last week Barclays was fined $450 million for its part in the LIBOR scandal. This week, under pressure from politicians and shareholders, Chairman Marcus Agius, COO Jerry del Missier, and Massachusetts-born CEO Bob Diamond — who had previously vowed to lead Barclays through its crisis — have all stepped down.
"I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth," said Diamond, one of the country's highest paid executives, moments before his Wikipedia entry was edited to reflect his new job title: Unemployed.
"I know that each and every one of the people at Barclays works hard every day to serve our customers and clients."
However heartfelt, Diamond's words are unlikely to appease many of those customers and clients. The swelling public dismay at banking industry's perceived incompetence, corruption and greed is beginning to trigger retribution that many consider long overdue.
The level of disquiet was reflected in a poll showing 49 percent of people believed High Street banks to be dishonest, while 45 percent thought them incompetent. Just one percent believed senior banking executives had improved behavior since the financial crisis began.
While people in the UK were once more likely to undergo a divorce than change their bank — event at the height of the 2008 banking crisis most customers left their money where it was — accounts are now being closed at a rate that will doubtless be alarming the big four.
The Co-operative bank — which offers plans it describes as ethical and sustainable — has seen a 25 percent hike in online applications in the space of a week. The Nationwide Building Society and London Mutual credit union are among other small institutions reporting a rise in enquiries.
"People understand this isn't a victimless crime and they're aware it is impacting on their mortgages, credit cards, their children's student loans, and their pension pots," Louis Brooks, a UK spokesman for the Move Your Money banking reform pressure group, told GlobalPost.
Brooks says the scandal could spell an end to the dominance of the big four, dealing them a heavy blow at a time when share prices have been falling steadily.
"Whereas the bailouts can feel very technical and far away, people can immediately relate to the idea that there was a bunch of investment bankers, sanctioned it seems by the rest of the institution, lying about the interest rates they were paying in order to protect themselves from losses and bolster their profits."
"This issue could really be the tipping point. We're beginning to see that public trust has reached such a nadir that people are taking action," he said.
The government, which has called an independent inquiry into the scandal, welcomed Diamond's decision to quit. Finance minister George Osborne said it was "the first step towards the new age of responsibility we need to see."
Lawmakers are already reviewing proposed reforms to the UK's financial sector that would see greater oversight placed in the hands of the Bank of England and new regulations that would offer greater protections to account holders.
Such changes have already been held up as harbingers of doom for the British financial industry. "Finance's golden age may be drawing to a close," Jeremy Warner, deputy editor of the Daily Telegraph, wrote last week. "It is not entirely clear what's going to take its place as a source of British wealth, jobs and tax revenues."
And with questions being asked about the Bank of England's role in the scandal and the failure of the Financial Services Authority watchdog to rein in the manipulation of the LIBOR, there is anticipation that its impact could spread beyond the financial sector.
"I think this could really be the issue that makes people say enough is enough," said Brooks. "Perhaps key to that is the tainting not only of the banking sector but also the wider establishment which has been tasked with protecting the public interest.
"This is doing much wider damage to the wider system and that's why we'll see it moving from a banking crisis to a political crisis."