Barclays stood accused of market rigging on LIBOR, and pleaded guilty.
There will be a lot of appropriate anger as a consequence. But let's look at the deeper issues.
First, the idea that there are markets, even in the City, is shattered for good. LIBOR was systematically rigged.
Second, this is systemic. The number of banks involved is large, and Barclays acted in a coordinated fashion with others.
Third, the means the assumptions of the efficient market hypothesis that underpinned City regulation have to be swept aside for good: they're a fantasy, as some of us have said for a rather long time.
Fourth, this means that the entire attitude towards the City has to change. The argument that the action of bankers adds value is now obviously open to serious doubt. The manipulation of LIBOR was a deliberate exercise in free-riding society. The supposed 'added value' of the City iuncreasingly looks like a myth.
It's time to rebuild the UK.
We need a real industrial policy.
We need a Green New Deal.
We need finance put back in its box. As I argue, of course, in The Courageous State (see right).
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I don’t understand why the FSA is leading on this. Why not Scotland Yard and the CPS? This should not be about whether to pay back a little money but about prison. If I were a conservative, surely I would say “Prison works!”
Not the CPS – the clear home for this is the SFO – the Serious Fraud Office, since, it is
a) Serious
and, subject to the ruling of a Court
b) a fraud and
c) a crime
I think this makes a case for going beyond more regulation.
It makes a case for a radical restructuring of the whole banking system-beyond the Vickers Report. Your post about Europe tackling the tax gap gives us an opportunity for an international co-ordinated effort to do so.While this may happen, it is possible, according to the people on postivemoney.com and other sites to have banking reform in one country. Once a significant player, such as the UK or France, has taken this step I suspect others would follow.
The push for change will have to come from the Left and Centre (although the sound honest business model you argue for in your book is in keeping with conservative values-if not Conservative ones).
Any chance Mr. Milliband will take this up?
It’s diabolical that despite market rigging to this scale – effectively stealing what could amount to billions of pounds, it appears as though no banker will go to jail for this (again).
If Stanford can go to jail for misrepresenting the position of his company in order to attract investment for further speculative purposes, then so should Diamond. Once distilled it’s hard to see where the differences lie.
Let’s not forget that jail remains a substantial deterrent for those who have something to lose from it…
Presumably in response the right-wing tabloids will quickly find a picture of a fraudster claiming incapacity benefit as s/he is skiing down the long slope of an EU butter mountain.
I wonder if the Beeb will stop its on-the-hour City commentators update and its security blanket obsession with the FTSE?
‘White-collar crime’ looks to be a label that may be necessary as things go forward on this issue.
On the basis of what I’ve read so far, Richard (just working my way through the FSA report now), as this involves other banks and it appears pretty obvious there has been collaboration between them (even if ‘informal’), this looks like the actions of a cartel. As far as I know, acting as a cartel is still illegal in this country, is it not? It certainly is in the US.
I suspect they are going to be slaughtered in the US….
Bob might be advised to throw in the towel and leave the UK. The Americans are likely to give him a much tougher ride than he will get in the UK. And we have that extradition treaty which says “who Uncle Sam wants, Uncle Sam gets”. There is nowhere easier for the Americans to get their teeth into him.
As I understand it, Barclays have got exemption from anti-trust prosecution in the US. But I am not sure if that covers civil litigation.
As for people going to jail, I am not sure if you can for price collusion because otherwise people would be going from the airlines, supermarkets, consumer goods companies, energy companies etc!
Banks have internal and external auditors. Why are they not effective?