Posts Tagged ‘Libor scandal’

Playing party politics over Libor could wreck one of Britain’s leading industries

05/07/2012, 07:00:31 AM

by Peter Watt

You’ve got to say that the banks are shockingly bad at their own PR.  The fact that reckless lending played a significant part in the cataclysmic global downturn didn’t exactly endear them to people.

Obscenely high bonuses that seem at odds with the overall performance of the company don’t help.

And then to top it off they’ve been fiddling rates of interest so that they made bigger profits and created a false sense of their own economic strength!  Understandably therefore many people right now wouldn’t spit on a banker if they were on fire.

But in the furore we seem to be forgetting that this is also an industry that employs 1.1 million people in the UK.  That contributes 9% of the gross value added in the economy as a whole, generates 7% of all tax receipts (£35.7 billion) and produces a trade surplus.

So the current crisis in our financial sector is a potential crisis for our already fragile economy.  We simply cannot afford for this mess to continue, there is too much at stake.  It is right therefore that all parties are keen to restore the credibility of the UK’s financial sector.

If people around the world fear that our financial sector is prone to fraud then they will take their money elsewhere.  It’s not like moving a factory or an industrial complex; they can simply move their capital with a phone call or click of a mouse.

And if credibility is to be restored or maintained then decisions need to be taken about what the right balance of regulation is and who polices it.  And there are the Vickers proposals to implement splitting retail and investment banking.  Big issues that need to be sensitively but robustly handled if this vital industry is not to be further harmed.

Instead we have a slanging match between the parties.

The hundreds of thousands of bank workers earning modest wages must be crying into their ledgers.


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Want to fix banking regulation? Try a dose of greed

04/07/2012, 07:00:07 AM

by Anthony Bonneville

It’s been a bad couple of weeks for bankers.

Barclays has been caught with its fingers in the proverbial till again. A new mis-selling scandal has been unveiled featuring all our favourite banking villains. And Nat West meanwhile fails to perform even the most basic of tasks one would expect from a bank.

The cry has gone up, “something must be done,” and in government, this means inquiries, reports, sage deliberations and, ultimately, nothing happening to the banks who, by an astonishing coincidence, are also substantial donors and lobbyists.

Meanwhile Joris Luyendijk’s excellent blogs in the Guardian continue to reveal the mentality of some people in financial services and the potentially toxic culture that they are immersed in and inevitably affected by.

One of the finest examples of this is the interview with a senior regulator, who advises,

“Banks are fundamentally amoral places. They are not immoral; morality simply has no part in the decision-making process. They talk about ‘reputational risk’, not about right and wrong decisions”

He’s not wrong. The resignation statement of Barclay’s chairman Marcus Agius (before he unresigned himself and took charge again following Bob Diamond’s exit) declares.

“We will establish a zero-tolerance policy for any actions that harm the reputation of the bank.”

Not even zero tolerance for actions that could harm the reputation of the bank. This form of words rather unfortunately leaves the door open to an interpretation that Barclays staff are being enjoined not to “do no wrong” but “don’t get caught”.

Bob Diamond followed suit yesterday with the type of heartfelt of mea culpa that restores public faith in bankers’ conscience and integrity,

“The external pressure placed on Barclays has reached a level that risks damaging the franchise”

Or maybe not.

Clearly then, it is a vain hope that the bad banks will keep their own house in order, so what is the solution?


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David Cameron will fully nationalise RBS

03/07/2012, 01:36:39 PM

by Jonathan Todd

We didn’t think the reputation of the financial sector could sink any lower. The Libor-fixing scandal means it has. We may be less surprised that the government’s deficit reduction strategy continues to hurt and not work. When government borrowing jumped to £17.9bn in May, up from £15.2bn in the same month last year, this was confirmed.

These two factors make the impossible seem possible: David Cameron will seize the initiative by an audacious full nationalisation of RBS and its reconstitution as a national infrastructure bank.

The logic that leads to this implausible conclusion involves three stages to this parliament and an evolving contest for national leadership.

Stage one: Two parties together in the national interest.

This must now seem a golden age from the perspective of Downing Street. The political law of this bygone time was that Labour had made the economic mess and Cameron’s government was taking the tough actions needed, with an expectation that the economy would recover well before the general election, which Cameron would win on the back of this success.

Attempts to have Labour adjust to a reality in which fiscal credibility has an increased political salience – such as In the Black Labour – retain an important relevance to our party. But times have moved on. It is ever more obvious that the government’s tight fiscal policy isn’t working.

As the government goes to Olympian efforts to keep their omnishambles rolling, ever more eyebrows are raised, querying whether these good chaps know their apples. They lost the benefit of the doubt long before Chloe Smith spectacularly crashed into the national consciousness.

Stage two: Attacks which seek to undermine the basis of Labour’s claim to national leadership.


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