Fallen banking titan Bob Diamond on Wednesday described regulators on both sides of the Atlantic as partly complicit in a scandal involving the manipulation of a key interbank lending rate, telling a British parliamentary committee that government watchdogs had failed to act after his bank, Barclays, informed them of industry-wide irregularities during the U.S. financial crisis.

The allegations highlight the relationship between financial institutions and regulators at a time when risk-taking and misdoings at big banks again are the focus of debate in Washington, on Wall Street and in London. Diamond stepped down Tuesday as chief executive of Barclays on the heels of a U.S.-British investigation that resulted in a $450 million fine for the bank for manipulating key lending rates between 2005 and 2009. The resignation ended the tenure of a legendary figure who brought a high-flying American-style culture to the bowler-hatted bankers of London’s financial district.

Barclays is one of a number of global banks being investigated for alleged improprieties that tainted the credibility of the London interbank offered rate, or Libor, the benchmark figure that largely determines the adjustable lending rates for U.S. credit cards, student loans and some mortgages. The emerging scandal has touched off a firestorm engulfing the London financial world, with Prime Minister David Cameron this week announcing a broader inquiry into banking standards that is set to haul some of the globe’s most powerful financiers before a parliamentary committee.

At the hearing Wednesday, furious British politicians seemed to put Diamond on trial as if he were the Gordon Gekko character from the “Wall Street” films, blaming him for importing a culture of risk and big bonuses to London. The 60-year-old American sought to defend his response to the Libor scandal, insisting he learned only last month about the extent of wrongdoing among an “abhorrent” but “small” group of 14 rogue traders at Barclays who had been manipulating rates for personal gain.

Diamond also painted a picture of the bank’s accusers — government regulators — as at least partially to blame. Documents released by Barclays on Tuesday night said the bank had “raised concerns” with British regulators, the Bank of England and the U.S. Federal Reserve that other financial institutions were not being honest about interbank lending rates during the financial crisis that peaked in September 2008.

Other banks, Diamond said, were routinely underreporting the rates at which they were borrowing, afraid that revealing how high their costs had soared would spark an investor panic or government nationalizations. He seemed to suggest that regulators were content to see misreporting of interbank lending during times of crisis, when strict accounting of high rates could tighten lending even more, and that they acted to curb such activity only during less sensitive periods.

Asked how regulators responded to Barclays’s reports of widespread misreporting, Diamond said, “Various levels of acknowledgment but no action.”

“There was an issue out there,” he added, “and it should have been dealt with more broadly.”

In notes written by Diamond and released Tuesday evening, Barclays also disclosed a conversation between Diamond and the Bank of England’s deputy governor, Paul Tucker, that took place in October 2008. Tucker is said to have called Diamond to pass on the concerns of top British government officials over Barclays’s seemingly high Libor rates at the time, suggesting that such elevated levels did not need to be as “high” as they were.

Diamond said Wednesday that he never viewed the conversation with Tucker as a “directive” to artificially lower rates. Rather, he saw it as Tucker flagging the rising political concerns over Barclays’s solvency only two days before it closed a major deal for new private equity. Diamond said his notes on that conversation, passed down to another senior official at the bank, were later misinterpreted to mean that British officials were effectively ordering Barclays to artificially lower its reported lending rates.

The Bank of England has denied knowledge of rate manipulation. On Wednesday, the bank said Tucker — the man widely expected to be the bank’s next governor — would soon appear before the committee to give his own account. A spokesman at the Financial Services Authority who declined to be named, citing the British banking regulator’s policy, declined to comment. But the spokesman cited the agency’s official report on Barclays, which suggests the bank was never explicit about its allegations that other banks were lying about their rates while attempting to mask its own misconduct.

The Fed on Wednesday said it had no immediate comment.

The 2008 period during which Diamond said regulators looked the other way is largely separate from the heart of the wrongdoing at Barclays or the manipulation of the lending rate between 2005 and 2007 that was orchestrated by a group of traders to elevate their bonuses. The numbers reported by that group were among those used to calculate the daily Libor rate, which influences the rates paid by millions of credit card and mortgage holders, affecting about $350 trillion worth of loans.

British politicians questioned Diamond’s assertion that the bank had acted as quickly as possible to investigate and contain the damage once it was uncovered. Given news reports in 2008 that suggested ongoing manipulation of Libor rates and Diamond’s own assertions that other banks were engaging in misconduct, they chided him for not digging deeper into his own organization to establish the truth.

John Mann, a lawmaker from the opposition Labor Party, pointed out to Diamond that the Quakers who found Barclays had done so with the motto “honesty, integrity and plain dealing.” He then offered to have that statement tattooed on Diamond’s knuckles.

“You’re in charge,” Mann said. “People were suggesting impropriety. And you did not investigate it. Either you were complicit or you were grossly negligent or you were grossly incompetent.”

Craig Timberg in Washington contributed to this report.