Diamond selected as fall guy

Listening to the Chancellor this morning you could be forgiven for thinking that this "Libor business" had come as a hell of a surprise and that none of the (hopefully) sharp eyed bean counters at the Treasury or Bank of England had noticed manipulation of a key interest rate.............a 3 minute check on Wikipedia reveals the following however:

On Thursday, 29 May 2008, The Wall Street Journal (WSJ) released a controversial study suggesting that banks might have understated borrowing costs they reported for Libor during the 2008 credit crunch.[7] Such underreporting could have created an impression that banks could borrow from other banks more cheaply than they could in reality. It could also have made the banking system or specific contributing bank appear healthier than it was during the 2008 credit crunch.
For example, the study found that rates at which one major bank "said it could borrow dollars for three months were about 0.87 percentage point lower than the rate calculated using default-insurance data."
To further bring this case to light, The Wall Street Journal released another article dealing with this matter titled "U.S. Probe Presents Dilemma over Libor" on Friday, 18 March 2011. The article stated that regulators are focusing on Bank of America Corp., Citi-group Inc. and UBS AG. Making a case would be very difficult because determining the LIBOR rate does not occur on an open exchange. According to people familiar with the situation, subpoenas have been issued to the three banks.
In response to the study released by the WSJ, the British Bankers' Association announced that Libor continues to be reliable even in times of financial crisis. According to the British Bankers' Association, other proxies for financial health, such as the default-credit-insurance market, are not necessarily more sound than Libor at times of financial crisis, though they are more widely used in Latin America, especially the Ecuadorian and Bolivian markets.

The question is whether directing all the fire at Bob Diamond will stop people asking the question to what extent did the Government (then and now) turn a blind eye ? Well it seemed to work with Fred Goodwin..........