Time for a Leveson-style inquiry into the culture, practices and ethics of banking?
That’s what this petition is calling for – and I agree.
I’ve thrown my dummy out of the pram around all things banking, finance and economics before – remember: “You Bastards! Give me back my subject!“ ??
This is more a case of “You Bastards, give us back our money!” – remembering that the banks have been bailed out and propped up by the tax payer while all of this was going on. There are a whole host of issues here, and we’ve only just found the tip of the iceberg if Robert Peston is correct.
If the banking crisis didn’t bring down the banking system, there is every possibility that the legal fallout from this one could do just that. On Newsnight of 27 June 2012 one of the panellists in the USA – a former regulator said that the US Department of Justice had already identified that people had lost money as a result of this. Assuming that a court of law in the US can prove this, then potential liabilities for all the banks concerned could be massive. My personal take is that it would speak volumes of the UK regulatory system if it were the US and the EU that were to take the more punitive action – including criminal charges, and the UK none. Indeed, last night it was reported that no criminal charges were going to be filed.
Will it remain that way? Well Andy Wightman has already filed a complaint to the police alleging a breach of the Fraud Act 2006. Will we see those at the top of the organisations responsible (especially those that have moved on – Fred Goodwin for example) being held to account? I’m not holding my breath on that one.
Banking and party political funding
But it goes beyond banking. When we look at political party funding, a fair amount of money from the banking sector has gone into politics. Although the Conservative Party are probably most exposed to this, that’s not to say money from those in the banking industry (who may or may not have known about this) hasn’t gone to other parties. Hence why Labour in particular need to tread very carefully if they feel tempted to make this into a party-political issue.
The scale of this – like Leveson may well go far beyond party boundaries. I can’t help but feel that individual politicians will find themselves caught up in this. How many of them had friends and associates who were aware of this behaviour – and possibly benefitted from it? Will we see some difficult extradition cases to the US along the lines of the NatWest Three? Will we see newspapers trying to identify particular traders and managers, doing background checks on them and finding that they went to the same elite private schools and universities that the politicians went to?
I’ve barely touched on the economic impact of manipulating the interest rates – something first touched upon in The privatisation of interest rates. The costs are as such that I barely want to think. Has every single one of us who has taken out a loan in that period (I was one of them) taken a hit as a result of this behaviour?
Now put all of this in the context of a global economic crisis, polarisation of wealth distribution, public sector cuts, rising unemployment, rising costs of living…yes, this couldn’t have come at a worse time. As for the content of the emails released (see end of here), the whole thing would otherwise be a farcical gathering of stereotypical ex-public schoolboys getting caught with their trousers down…if it wasn’t for the fact that what they were doing was illegal and/or unlawful.
Someone blame the teachers!
Not that the housemasters of the public schools would be called in to explain how their former charges ended up doing such things any more than the professors of PPE at Oxford get questioned on the performances of todays frontbenchers (on both sides) in politics. Well…if you’re going to blame the teachers for bad things that happen in inner cities, doesn’t the same principle apply elsewhere? I’ll leave that one with you to wrestle with. (This paragraph wasn’t meant to be taken seriously, if you were wondering).
Coming back to banking, who’s going to sort out this mess once the dust has settled? Is there anyone else left to trust?
[Edited to add]
Kudos to Jon Snow of Channel 4 news.
First there was this blogpost highlighting Angela Knight of the British Bankers’ Association (and former Economic Secretary to the Treasury under John Major – is that post cursed?) refusing to do an interview…
…before things changed & she U-turned. Watch her in the face of Snow’s forensic questioning. The set up of Libor itself is astonishing – as are the lack of powers of the BBA.