[ by Howard Haykin ] For Barclays Chief Executive Robert Diamond, the headlines were ugly, but they couldn't compare to "Angry British Leaders Take Barclays’ Chief Executive to Task." Robert Diamond Jr., once again is in the cross hairs of angry politicians and dissatisfied shareholders.  A day after Barclays agreed to pay $452 million to settle accusations by the CFTC and Britain's FSA that the bank had tried to manipulate rates to benefit its own bottom line, top officials are calling for Mr. Diamond to provide a full account of what went wrong.  Many others were calling for Mr. Diamond's head. David Cameron, Britain's prime minister, said it straight away: "People have to take responsibility for the actions and show how they're going to be accountable."  And added, It's very important that it "goes all the way to the top of the organization." Mr. Diamond's list of critics is already long.  As with many global banks after the financial crisis, Barclays and its chief have been prime targets for criticism of Wall Street.  Shareholders protested the size of Diamond's pay package earlier this year.  In February, the bank had to pay $775 million in back taxes to appease the British government. Now, Mr. Diamond is apologizing for traders and executives who selfishly influenced interest rate benchmarks during the crisis to bolster profits and make the bank look healthier. Diamond, in response to British politicians, wrote: "We need to work every day to rebuild the trust that has been damaged by these actions and others that have come before them.  This kind of conduct has no place in the culture of Barclays." The bank's settlement, which was struck on Wednesday with American and British authorities, is part of wide-ranging inquiry into how big banks set certain benchmarks, including the London interbank offered rates, or Libor.  Many other banks will be fined and sanctioned before the investigation concludes.  It was Barclays' misfortune to be first target of the regulators.  It's just a matter of time before we hear similar accusations against HSBC, JPMorgan Chase, Citigroup, and others. "This is not a compliance failure. It's an ethical failure," said Jonathan Hayward, a partner at Independent Audit, a corporate governance consultancy in London.  "The actions served only one purpose, to manipulate the market." Mr. Diamond is expected to testify before the British Parliament by the end of July.  Officials at the Financial Services Authority, the British regulator, will also most likely appear. Barclays could face further action.  Several traders in both London and New York are still under investigation, and could potentially face either civil or criminal prosecution, according to people with direct knowledge of the matter. "When ordinary people break the law, they face charges, prosecution and punishment," the leader of Britain's Labour Party, Ed Miliband, said in a speech on Thursday.  "We need to know who knew what when, and criminal prosecutions should follow against those who broke the law." The harsh scrutiny represents a stunning reversal for the chief executive who helped transform Barclays' investment bank from a regional firm to a major player on Wall Street. The American-born Mr. Diamond joined Barclays during a period of tumult. In 1997, shortly after Mr. Diamond started, Barclays decided to sell most of its investment bank, including its brokerage, equities and advisory groups. Mr. Diamond - who had held senior roles at Morgan Stanley and Credit Suisse First Boston in New York, London and Tokyo - was tapped to run the remaining part of the business.  It was a much-diminished investment banking unit that was referred to as the "rump." Building off the small, fixed-income business, Mr. Diamond slowly started to expand into other areas, like commodities and derivatives trading. As trading activity exploded in the last decade, he more than doubled the unit's pretax profits and its head count. At the height of the financial crisis, Mr. Diamond, the head of the investment bank, Barclays Capital, moved to take advantage of the weakness.  He beefed up its presence in the U.S. by acquiring the North American operations of Lehman Brothers in 2008, adding large advisory and equities divisions to the firm's portfolio. Barclays proved to be one of the winners of the crisis. Unlike other British banks, Barclays did not have to turn to the country's government for a bailout during the financial crisis.  Instead, the firm tapped sovereign wealth funds from Qatar and Abu Dhabi to recapitalize its balance sheet.  The Middle Eastern investors have progressively sold down their stakes in Barclays. Investment banking has been a particular point of pride.  Since the Lehman Brothers deal, Barclays has jumped in the global advisory rankings from ninth to sixth, according to the data provider Thomson Reuters. Such strength put Mr. Diamond in line to succeed John Varley as chief executive in 2010, a role he was passed over for in 2004. But almost immediately, Mr. Diamond found himself in the line of fire. Earlier this year, large shareholders raised concerns about Mr. Diamond's pay package.  In 2011, he received $9.8 million, including $4.2 million in deferred shares.  At the shareholder meeting in April, he faced a crowd of angry hecklers, some of whom dressed as eagles, reflecting the bank's logo. To appease investors, Mr. Diamond and other executives agreed to forgo some of their bonuses this year if certain performance goals were not met. Now Mr. Diamond faces criticism for the investment banking business that he helped build. Regulators said they had found "pervasive" wrongdoing by traders who worked in Barclays Capital, the group Mr. Diamond used to run. The filings showed that Barclays' treasury officials, which help to set Libor, routinely submitted false rates at the behest of the firm's traders, who profited from the move when buying and selling financial products on a daily basis.  Financial institutions are supposed to maintain so-called Chinese walls so that confidential information is not shared between divisions in pursuit of profit. E-mails between both parties, however, showed Barclays failed to keep its divisions separate.  One trader, after receiving a favorable rate from a bank employee, wrote: "I love you."  Another trader called a colleague a "superstar" for altering the rate. "The disclosures from the traders' conversation are quite shocking," said Ian Gordon, a banking analyst at Investec in London. On Thursday, Mr. Diamond continued to express contrition, calling some of the actions "wholly inappropriate."  He also noted that Barclays had taken steps to improve the controls, adding that the bank was in the process of "completing a review of employee conduct for all of those involved." Investors, too, remain skeptical.  On Thursday, shares in Barclays fell 15.5%. For further details, go to:  [Dealbook, 6/28/12].