Call me a spoilsport, but I wasn’t exactly sad to see the knobbly finger of public accusation pointing firmly in the direction of Bob Diamond (left) and his chums at Barclays Bank.
They were caught red handed trying to tamper with the LIBOR – the interbank interest rate that affects how much we all pay for our mortgages.
Diamond has the name and the demeanour of a Bond villain, staring coldly through rimless spectacles, while his poker face suggests disdain for the poor chumps (like me) who keep their cash in his bank.
The irony is that Barclays – now seen as symbolic of excess, greed and a broken financial system, was started by high minded Quakers back in 1690. What would its founders have made of Labour MP John Mann’s description of this once sober institution as a ‘rotten, thieving bank’?
Diamond resigned yesterday and said sorry to the Treasury select committee. It doesn’t really matter what he says or feels; the fact is that he will walk away with pots of money, including a bonus of £20 million. I repeat, a bonus of £20 million – which he refuses to return. He doesn’t see why he should; a fact in itself that speaks volumes about the total disconnect between the world of banking and the rest of us.
But what should be done? The past few days have seen calls for a public enquiry – some say led by MPs, others say it should be led by judges. One wonders if Ed Miliband will still be calling for a judge-led enquiry if some of the rumours suggesting government or Bank of England sanctioning of the LIBOR tampering turn out to be true.
If fraud has indeed taken place, I would like to see a thorough investigation take place involving the City’s police force, the Serious Fraud Office, whose job it is to protect citizens from financial fraud. Existing laws against fraud could be used and possibly new laws created to make it harder for Barclays – or any of the other banks implicated in the scandal – to get up to no good.
In other words I want an investigation that packs a punch rather than some ridiculous show trial that makes a lot of noise.I guess I’m thinking of Leveson.
Don’t get me wrong, I’ve found the hearings fascinating – who could resist such a parade of famous faces?But what does it actually amount to?
The furore around Diamond also reminds me of something that happened way back in the dark days of the 80s, in the Wild West atmosphere of the City post the Big Bang of 1986. The roots of our current troubles can be traced back to those days, when regulations separating investment and high street banking were removed and the finance genie was soon out of the bottle. (Cue gratuitous shots of 80s city workers.)
Nice mullet. Although this is supposed to be a picture of the London Stock Exchange in the 80s, the brightly coloured jackets make me wonder if it’s actually a shot of the London International Financial Futures Exchange, a crazy place I visited on a school trip in about 1986 (I did an A Level in Economics). The exchange consisted of a pit full of testosterone (amongst other things) fuelled young guys taking bets on the movement of the prices of currencies. It was incredibly exciting to be there – the energy of the place was something else, even to a Thatcher hating 16-year-old. Seeing it made me understand why people can fall in love with the raw power of money and the City, even if they intellectually recoil from it.
I guess what the moral panic surrounding Diamond and his chums at Barclays (I love it that one of his colleagues is called Rich Ricci) reminds me of the moral panic surrounding insider trading and general bad behaviour that culminated in the Guinness Trial back in the 80s.
For those of you not old enough to remember, the Guinness Trial dealt with a plot cooked up by Guinness Exective Ernest Saunders, to boost the price of Guinness shares, making it easier for them to take over rival company Distillers.
The plot was discovered when the notorious US financier Ivan Boesky – who’d bought a load of shares – gave evidence to a US court. Saunders and his co-conspirators Gerald Ronson (a property tycoon), Jack Lyons (a financier) and Anthony Parnes (a trader) were all found guilty. All except Lyons were sent to prison, although Saunders famously only served a fraction of his time in Ford Open Prison after he was diagnosed with Alzheimer’s ( he since has ‘recovered’).
The Guinness Trial was the hot topic of the day, but what did it actually achieve? Much was made of the fact that all four men were Jewish – the theory was that they were hung out to dry by a cynical City Establishment that closed ranks around more upper class figures, preferring to point the figure at outsiders. I think there may be something in this, but did the moral panic surrounding the trial make the City a fairer or more honourable place? Obviously not. Because under a regime of ‘light touch regulation’ as promoted by Thatcher, Major, Blair, Brown and Cameron, the rewards are just too exciting. Who cares about breaking a few rules if there’s serious money in it – as shown by the terrifying emails sent by Barclays traders where they talked about the need to manipulate the LIBOR.
I read this rather intriguing piece by Bruce Anderson. Obviously the world he describes, where “the old boys network kept the City clean” is long gone, and it would be foolish to try and recreate it. But surely there is a way of checking the current ethos of the City – a where personal relationships have been replaced by software and actions have no consequences?
I also want to throw in a bit of French philosophy – just for fun.
The moral panic raging in the media over Diamond and the endless demands for public enquiries – show trials if one’s being unkind – reminds me of Guy Debord and his book The Society of the Spectacle.
However, if you just want a headline, the basic thrust of Debord’s argument is that representations – often in the media – have become reality and that superficial images have much more power than authentic truth. As he explains: All that was once directly lived has become mere representation.
I wonder what he would make of the endless stream of articles, news items and Tweets about Leveson and the endless media circus surrounding Diamond and the LIBOR scandal. We become so wrapped up in the media coverage of these ‘events’ that any function they might have – to find out the truth in order to make better laws – becomes drowned out by our own chatter and our peculiar desire to put our wrong doers on show.
I want major changes in media ownership and definitely want to see the banking sector re-calibrated in a way that puts the need of the average saver or borrower back on the agenda. Is a show trial the way forward?
Well I watched Diamond in front of the MP’s yesterday and to be honest if he is going to have this with an inquiry he must be laughing all the way we are told to his next jobs with Sachs.