There's news today of another banking scandal as almost all our major banks agreed to compensate customers for mis-sold credit card and identity theft protection insurance for which the banks were already liable.
Let's be candid: there's not a hope this systematic mis-selling happened by chance: it indicates a cartel intended to defraud the public (Adam Smith will note).
So why isn't it the case that this organised abuse is not treated as such? This time, surely, there should be prosecutions? If the government really believed in markets isn't it time it defended them?
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That’ll happen:Not.
I suppose it is possible that a career politician is hired as a director/adviser because of his business accumen, and his extensive knowledge of banking/insurance/pensions ?
There is no chance of this! Anthony Jenkin was promoted to chairman after presiding over VISA when the PPI was going on! If you superintend fraud you get promotion?
On this I agree with the Austrians (economics that is): They should have been left to fail -they wouldn’t have done it again!
Simon
Yes, it would’ve seemed fun in the s-term. Not such fun for all those who woke up in the morning to find their card invalid, no way of withdrawing cash etc.
Once one bank fails, there would be thousands of people outside all the other banks, demanding payment in cash (remember Northern Rock). Those banks would, unquestionably, then also fail, because they aren’t in a position to refund every depositor if every depositor turns up at once.
For the vast majority of us, who aren’t self-employed, we have no ready access to ‘cash’. How do you live until the next pay day & even then can you persuade your employer to pay you in cash?
Large parts of the retail sector (including most supermarkets & all petrol retailers) aren’t set up to cope with every punter paying purely cash on the nail.
It sounds fun, but it would’ve been a huge societal melt-down. It would, in fairness, have killed the power of the ‘Banksters’ once & for all but it could also have ushered in a state of total anarchy. You can see why Brown & Darling pulled back from it.
Why are we still using euphemisms for the activities of the banks? Knowingly telling lies in order to achieve financial gain is not error or negligence it is theft. Describing investment in sub-prime mortgages as low risk was a lie. Stating PPI covered my circumstances was a lie. This was just another routine scam to add to money laundering, tax avoidance and piecemeal usury. Is there anyone left in the country who believes it will be the last?
In my case Bill, no, I’m certain it won’t be the last. And yet, the banks are still here, have been given billions in cheap money for the Funding for Lending scheme, and , to my knowledge, no bank directors have been charged with any criminal or civil offence.
Simon is right, in that it would have been better to let the banks crash and burn rather than bail them out. Yes the short term pain would have been bad, but the profound shock to the economy and society would have probably totally destroyed the credibility of the neoliberal/free market ideology that we’ve been subjected to since the 80’s.
Of course, a better alternative than either of the above would have been to nationalise the banking system instead of bailing it out on the basis that letting it fail would have caused too much damage to the real economy but that as the private sector model had failed the state would have to do the job instead.
If we had politicians that, as Richard so aptly puts it, believed in the Courageous State, we could now have a banking system that actually does as banks are supposed to do in a properly functioning economy.
Bill – you are absolutely right! Unfortunately, the whole finance sector is dominated by euphemistic language so that obfuscation and ‘complexity’ hide the wallet lining from the public. At the same time the good old British seem to be happy to vilify those on benefits while big finance hoovers the money up. We all know that Government backing for the banking system increases it’s profits and share value, it is the biggest free lunch in history yet the propaganda that the poorest in our community need to be scapegoated expands logarithmicallY! It seems you can fool most of the people all the time!
Here is an area where we are, regrettably, far behind the US.
In Europe they still tend to rely, poor things, on financiers & professionals being respected people who will ‘do the right thing’.
In the Anglo-Saxon economies we know they won’t. In the US a proven fraudster gets 30 years in maximum security in with the Latin Warriors, the Bloods & Aryan Brotherhood & a Corporation (eg BP) that commits a heinous offence gets cleansed of its ill-gained profits.
In the UK – the chaps get a warning & the corporation gets a fine of a few thousands.
The descriptions above seem quite applicable to ‘government’ as well…..
Why?