Well, IMHO, Barclay's is taking alot of heat for the entire industry.
They were correctly reporting their libor rate, which scared some people as it was higher than other banks libor rates.
Partially because other banks were lying, partially because they were in more trouble than other banks.
The government asked Barclays to falsely report their libor rate at a lower amount.
This has the effect of lowering the reported libor rate. The libor rate is important as it's the base rate for pricing alot of other paper. This other paper is the base rate for pricing alot of derivatives,etc.
if you follow the chain, the libor rate can indirectly affect the price of literally trillions of dollars of financial instruments.
Hence the hoopla surrounding the rates manipulation.
Emails from the brokers in wall street clearly show that people from within the bank, not the govt, were asking for low ball rates. It was the bank serving its own interest here.
These are the infamous "when I write a book, I'll mention you" / "I hope this never gets written" lines.
Regarding your statement about instructions from on high -you are alluding to the comments by Bob Diamond, head of Barclays, about Tucker, the deputy governor of the bank of England. The full,emails have been released and they show little compelling evidence of instructions, but more of paying attention to the Barclays high borrowing costs, implying lack of confidence.
Tucker has fallen back on the "no recollection" defence, which is only one step up from "only following orders". Looks like him and Diamond are sacrificing themselves to protect the real power brokers.
They were correctly reporting their libor rate, which scared some people as it was higher than other banks libor rates.
Partially because other banks were lying, partially because they were in more trouble than other banks.
The government asked Barclays to falsely report their libor rate at a lower amount.
This has the effect of lowering the reported libor rate. The libor rate is important as it's the base rate for pricing alot of other paper. This other paper is the base rate for pricing alot of derivatives,etc.
if you follow the chain, the libor rate can indirectly affect the price of literally trillions of dollars of financial instruments.
Hence the hoopla surrounding the rates manipulation.