Robert Diamond’s resignation today as CEO of Barclays PLC is the direct result of the bank’s deliberate submission of artificially low reports of its borrowing costs from 2005 to 2009. These reports were used by the British Bankers' Association in compiling data from major banks and using that data in determining the London Interbank Offered Rate (“LIBOR”). At least a dozen other banks, including Citigroup, Deutsche Bank, HSBC and UBS, are being investigated to determine if they likewise submitted false reports of their borrowing costs to the British Bankers' Association.

One important take-away from the current controversy is that LIBOR is likely to cease being relied upon by banks in setting interest rates on commercial loans and other financial contracts. Banks are now looking for the most credible replacement for LIBOR available in the market today.