Assignment Scenario:
As a new marketing associate with Barclays Bank, you are tasked with writing a critical essay summarizing what transpired during the investigation conducted by the United States Department of Justice into the abuse of the London Interbank Offered Rate (LIBOR) interest rate regulated by the British BankerΓ’ΒΒs Administration. This essay, if chosen by your new employer, will be the report presented to the Board of Directors.
Write a 2Γ’ΒΒ3 page, (not including a title and references page), double spaced, critical essay responding to the checklist items. For assistance with your Assignment, please use your textbook and library research resources. The instructions for you to execute this task are as follows:
Directions for completing this Assignment:
1. Read the Γ’ΒΒBarclays Bank: Banking on EthicsΓ’ΒΒ case study: case study is below..
2. Learn how to write a critical essay: I will make the changes if need be..
3. Use APA format and citation style, provide a title page and references, and do not forget to use in text citations with their accompanying references so as to avoid plagiarism.
4. In your critical essay that includes your thesis, arguments, support, and conclusion, respond to the following:
Checklist:
Γ’ΒΒ Describe the level of ethical development the executives at Barclays demonstrated
when manipulating the LIBOR interest rates.
Γ’ΒΒ Did Barclays Bank neglect social responsibility? What could they have done to be more socially responsible?
Γ’ΒΒ What actions regarding Corporate Social Responsibility (CSR) could Barclays have engaged in after the scandal broke to set things right and ensure that such an event would not happen again?
Γ’ΒΒ Describe what level of morality would have been demonstrated if executives at Barclays asked themselves, Γ’ΒΒEven though manipulating the LIBOR will increase company profits, is it the right thing to do in the long run?Γ’ΒΒ
Γ’ΒΒ Explain the importance of ethics and social responsibility in marketing as a result of your case study analysis.
Case study
Chapter 3
On February 28, 2012, the United States Department of Justice announced a criminal investigation into abuse of the LIBOR, an important interest rate regulated by the British BankersΓ’ΒΒ Administration. Four months later, London-based Barclays Bank was fined more than $440 million by United States and English financial regulatory agencies for knowingly manipulating the LIBOR to its own advantage. The political and economic uproar that followed the exposure of BarclaysΓ’ΒΒ actions led to several resignations (including that of BarclaysΓ’ΒΒ CEO Bob Diamond) and further criminal investigations. Former governor of New York Eliot Spitzer called the incident Γ’ΒΒthe mega-scandal of mega-scandals,Γ’ΒΒ while journalist Robert Scheer christened it Γ’ΒΒthe crime of the century.Γ’ΒΒ The LIBOR, short for Γ’ΒΒLondon Interbank Offered Rate,Γ’ΒΒ is the interest rate banks pay when they borrow money from each other. To calculate this rate, up to 20 influential British banks report their own proposed bank-to-bank lending rates. The highest and lowest rates are trimmed off, and the remaining rates are averaged, creating the LIBOR. A low LIBOR often points to financial stability, while a high LIBOR indicates that banks lack confidence in each otherΓ’ΒΒs economic health. What Barclays was fined for was proposing artificially low bank-to-bank rates to make itself appear more stable than it actually was. However, further investigations indicated that Barclays colluded with other banksΓ’ΒΒand perhaps even the British governmentΓ’ΒΒto impact the LIBOR itself. An unnaturally low LIBOR would suggest greater economic stability than actually existed, misleading investors and loan-seekers in a potentially volatile market, and thus creating profit for the banks involved in the collusion. The rate manipulation carried out by Barclays affects not only London banks and business executives, but also small businesses and individualsΓ’ΒΒperhaps even you yourself. Because it has historically been considered trustworthy and economically accurate, the LIBOR is used all around the world as an interest rate and financial instrument benchmark. Everything from currency values (including the United States dollar) to multimillion-dollar corporate debts to home mortgages to individual student loans depend on the LIBOR. While it may not seem like it, each of these is a product that is marketed and sold. As loans and exchanges of varying types are banksΓ’ΒΒ primary sources of profit, banks compete to exchange these products within a market. At the consumer level, consider how many car and credit card commercials you have seen advertising a low interest rate. Hundreds of trillions of dollarsΓ’ΒΒ worth of these financial products have been sold based on the LIBORΓ’ΒΒa rate that may not in fact accurately reflect the worldΓ’ΒΒs shaky economic standing. Journalists and economic analysts have been quick to reject the ethicality of BarclaysΓ’ΒΒ actions. As information about the LIBOR scandal broke, TIME contributor Christopher Matthews wrote, Γ’ΒΒ[BarclaysΓ’ΒΒ alleged collusion] speaks to the moral compass, or total lack thereof, of the worldΓ’ΒΒs financial professionals...the public and the government no longer trust the industry to set its own standards for acceptable behavior.Γ’ΒΒ In a piece for
The Nation, Robert Scheer said, Γ’ΒΒThe modern-day robber barons pillage with a destructive abandon totally unfettered by law or conscience and on a scale that is almost impossible to comprehend.Γ’ΒΒ Dennis Kelleher, president of nonprofit financial watchdog organization Better Markets, Inc. was perhaps most condemnatory of all: Γ’ΒΒWhat we probably need is to wipe out this entire generation of so-called banking leaders who apparently have no ethics or integrity.Γ’ΒΒ While the total sum of the LIBOR scandalΓ’ΒΒs consequences are yet to be seen, BarclaysΓ’ΒΒ actions may go down in history as a monumental failure in business ethics and corporate social responsibility.