This article is from the archive of our partner .

Update (10 a.m. EDT): Barclays' chief operating officer Jerry del Missier has also quit, The Guardian reports. Check out the bank's statement on his departure at the paper's live blog.

Original: Barclays is one of the biggest banks in the world, so the ongoing interest-rate scandal that forced out its chief executive Monday is worth understanding, especially as it threatens to affect other major banks. The news on Tuesday morning is that Bob Diamond, the U.S.-born CEO of the London-based bank, stepped down suddenly after first promising in a Monday email to staff that he would stand by his company and clean up its mess. Reuters' Matt Scuffham and Kate Holton reported that he changed his mind and decided to quit after Prime Minister David Cameron and Finance Minister George Osborne announced a parliamentary inquiry into the scandal. And the Financial Times' Patrick Jenkins, Brooke Masters, and George Parker report that Diamond is steeling himself for an appearance before a parliamentary hearing on Wednesday, at which he's threatened to reveal "embarrassing details" about the bank's dealings with regulators if he's attacked.

So what are Diamond, the regulators, and other banks so worried about? Basically, the rate-rigging scandal involves banks artificially pushing down estimates of interest rates that go to create the London interbank offered rate (LIBOR), which is used as a global benchmark. For some concise, easy-to-understand background, check out The Associated Press' Robert Barr, who notes that "Barclays' management has come under fire since the bank was fined $453 million last week by U.S. and British regulators for submitting false reports on interbank borrowing rates between 2005 and 2009." And the FT reports that Diamond, "furious that he and the bank have been blamed for 'lowballing' the rates," is threatening to reveal that regulators knew bankers were artificially pushing down the rates.

Now, the fear is that the scandal will spread across London's banking sector. CNN's Maureen Farrell reports that "Seven additional banks are cited but not named in documents made public as part of Barclays' settlement last week with the Financial Services Authority, the British banking regulator." No doubt their CEOs are watching Diamond's plight closely.

This article is from the archive of our partner The Wire.

We want to hear what you think about this article. Submit a letter to the editor or write to