Robert Diamond’s Next Life

Mark Peterson/Redux, for The New York Times

Diamond, right, without the trappings and entourage of his former life.

In the sparse office he now occupies in the Seagram Building in Midtown Manhattan, Robert E. Diamond Jr., the former C.E.O. of Barclays, paced in circles and tried to explain how he had gone from being one of the highest-ranking and highest-paid bankers in Britain to a guy who takes the subway to this office in exile and waits in line for his coffee at a cart on Park Avenue. Not to suggest that times are too tough for Diamond â€" he’s not complaining, and he still has more money than his grandchildren’s grandchildren will ever need. But for the American investment banker who was arguably responsible more than anyone else for transforming the British finance industry, it has been a pretty spectacular fall.

Diamond at a Brooklyn Nets game at the Barclays Center in April.

“It’s hard for me to talk about it,” Diamond said. “I’ve tried to move on.”

The conventional explanation is that Diamond, 61, was ousted last July after regulators in Washington and London uncovered a “pervasive” scheme by several banks, including Barclays, to manipulate a key interest-rate benchmark known as the Libor, or London interbank offered rate. The years-long investigation found that Barclays traders regularly submitted false information in order to boost the company’s trading profits and, in some cases, make the bank appear stronger than it really was. (“If you know how to keep a secret I’ll bring you in on it,” one trader wrote to another in an instant message.) The scheme, which cost Barclays $450 million to settle, was described as the finance world’s “scandal of all scandals” and eroded what little confidence was left in the workings of the industry.

Despite all the headlines â€" and there were hundreds of them â€" Bob Diamond’s role in the scandal was minimal, and perhaps wildly overblown. It may have been the nominal cause for his dismissal, but what really drove his departure was that he had become, as one member of Parliament described him, the “unacceptable face of banking.” Unlike other C.E.O.’s who have lost their jobs since the financial crisis, Diamond wasn’t ousted by his company’s board. He was pushed out by the British government â€" specifically by Mervyn King, the governor of the Bank of England, which is the equivalent of Ben Bernanke’s deciding to fire Jamie Dimon, the C.E.O. of JPMorgan Chase.

On July 2, less than a week after the Libor scandal broke, King summoned Barclays’ chairman, Marcus Agius, to his office in the imposing Bank of England Building in the heart of London’s financial district. According to Agius, King told him, “Bob Diamond no longer enjoyed the support of his regulators.” The next morning, Diamond resigned. The day after that, George Osborne, Britain’s finance minister, declared, “I hope that it is the first step toward a new culture of responsibility in British banking.”

Diamond looked stung when I mentioned Osborne’s comment. “Do you want the truth?” he said. “Up until all of this, I didn’t even know the mechanics of how Libor was set. If you asked me who at Barclays submitted the rate every day, I wouldn’t be able to tell you. I bet you if you asked any chief executive of any bank on the street, they would give you the same answer.”

The “I can’t know what every rogue trader is doing” defense has been used before, though I don’t doubt that it’s true. But the assumption in Britain and around the world was that Diamond created a culture at Barclays that encouraged the profit-at-all-costs mind-set that led to the scandal.

“After the financial crisis, the British establishment became very divided over what’s the model for the big banks that we want to see,” Martin Wolf of The Financial Times told me. “Bob represented investment banking big time. He represented the success of it â€" but also the sense that investment banking is dicey and not a completely sound business. He represented a way of doing business that we’ve become very uncomfortable with.”

It’s an easy and satisfying caricature â€" that the reckless American banker poisoned the whole system â€" but it ignores an important reality: under Diamond, Barclays was the only major bank in the U.K. that didn’t need to be bailed out.

Andrew Ross Sorkin is a financial columnist for The Times and the author of “Too Big to Fail.”

Editor: Joel Lovell

A version of this article appeared in print on May 5, 2013, on page MM20 of the Sunday Magazine with the headline: The Damnedest People Ride The Subway.