Labour after LIBOR

If anyone out there is still making the intellectual case for further banking deregulation, they are keeping strangely quiet right now. And yet for the longest time, an automatic presumption in its favour constituted the prevailing orthodoxy among Conservative and New Labour politicians alike.

Last week’s revelations about Barclay’s complicity in rigging the London Interbank Offered Rate highlight just what was wrong with the doctrine.

It is no more tenable to expect bankers to police themselves than it is to ask a bunch of teenagers on their first unaccompanied holiday in Faliraki to practice safe sex and strictly observe government drink unit guidelines. Continue reading

Barclays: dislocation of Capitalism from itself

An anonymous banker, writing in the Telegraph yesterday, told about how he and his colleagues were helping manipulate the UK’s bank borrowing rate.

The surprise is to find out how openly it was discussed.

The discussion was so open the behaviour seemed above board. In no sense was this a clandestine gathering.

But the anonymous banker’s own naivety (which they admit themselves) was on the realisation that

even though Libor [London Interbank Offered Rate] may have been, for example 2pc, the real Libor rate the bank was paying was more like 5pc or 6pc. So in fact, we needed to be lending money at Libor plus 3pc or 4pc just to break even. That is what we were telling clients. Continue reading

Be angry at bankers, be angrier at economists

Like millions of others I am outraged by the LIBOR scandal; the wrongdoings of the ‘submitters’ and other traders at Diamond’s Barclays Bank and their fellow travellers at the British Bankers Association. Which is why we at PRIME economics launched a government e-petition calling for a judicial public inquiry into the wrongdoings of banks, and for the inquiry to have powers to summon witnesses and question them under oath. Continue reading

Banks inquiry – e-petition now over 10,000 strong

Just after noon today the 10,000th person signed our e-petition [click here to sign] for an independent judicial inquiry into the banks’ misdeeds and ethics, and into the role of the British Banker Association.  Our heartfelt thanks to all who have supported this initiative, which has undoubtedly had an impact on the political scene.

The government still seems unwilling to have such an inquiry – we wonder why, surely no hidden links nor cosy horseplay there! Continue reading

Diamond should be prosecuted and, if convicted, jailed

If there is one thing that produces boiling anger amongst the general public, it’s that the bankers who’ve brought this country to its knees have walked away unpunished. Despite criminal negligence, if not outright incompetence and irresponsibility, which has cost millions their jobs, pay cuts and loss of public services, they get off scot-free after plunging the nation into eye-watering debts of hundreds of billions, yet burglars or thieves who purloin a few hundreds or thousands are sent to prison. The bank bosses of RBS, Lloyds and HBOS were eventually eased out of their jobs, but none was prosecuted. One rule for the bankers and the rest of the elite who administer the rules in their own interest, and another for the rest of us. Continue reading