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THE RATE-RIGGING scandal at Barclays Bank has propelled the murky world of Finance back into the headlines. Public opinion in the United Kingdom is very strong with demands that something needs to be done.
This is not just an English problem but extends further. The culture at banks has once more been called into question. I have been asked if the culture has been improving: a cursory glance at the events of the last seventeen years suggests the opposite.
One commentator suggested that we should be able to rely on the fact that people should behave morally and ethically. In an ideal world maybe but none of us live there. There will always be a rogue element in society that will break laws. Banking is no different and adequate deterrent is required. Right now we are lacking a believable deterrent and whilst that situation remains there is no chance that culture or behaviour will improve.
My escapade at Barings starting twenty years ago and ended a full seventeen years ago. It was described as a defining moment, the time when things would start to change in banking. It did for a while but it didn’t take long for people to forget. Regulators were given new powers, new laws
and standards of behaviour were introduced and legislation was written, but the quality of control remained the same; poor.
“No, it’s not okay!”
Neither did the rhetoric that we hear from senior banking officials change much, their explanations were largely identical. The scandal involved a small number of people, they are no longer employed, the situation has been corrected, it won’t happen again and we need to return to the serious business of restoring reputation and confidence. Okay?
No, it’s not okay! We are fed up of being told that everything is okay and it clearly isn’t.
We need a truly defining moment. Without one there will be no change in behaviour and the culture will continue to trawl the depths of moral and ethical appropriateness. The opportunity has to be taken now to put manners on the banking community. All action has consequence and there has to be adequate deterrent for those who are willing to cross the line between right and wrong. That is true in London, Dublin, New York or anywhere in the world. We lack adequate deterrent in the world of Finance and that is not acceptable.
I quite rightly went to jail for my actions in Singapore and I really have no desire to see jails full of bankers as it is definitely the smallest minority that transgress but a serious message has to be sent. Rate-rigging and manipulation are as serious as it gets. Bob Diamond himself has described those involved actions as abhorrent: he is correct. But let’s not forget that this is the same person who was suggesting a few months ago that it was time for bankers to stop apologising.
The punishment has to fit the crime. In this instance if the punishment does not make people in the City of London sit up and take notice, it will be as meaningless as the £290m fine that has been handed down to Barclays Bank.
Not unlike what we have experienced in Ireland over the last few years, we are told that criminal prosecution may be difficult. I still find that particular pill very difficult to swallow. Rate-rigging and manipulation are very strong words; everyone will accept that they are wrong. The motivation, we are told, was to present a better picture of the bank’s performance and at different times to book profits for these traders.
“Distinct apathy”
There’s very little difference in the way that financial positions were manipulated at the height of the banking scandal in Ireland. I’ve made it very clear in previous articles that there is a distinct apathy when it comes to pursuing white collar crime. There is disagreement in the UK as to who should lead the inquiry into the events at Barclays, whether the investigation should be judicial or government-led.
Much like the tribunals that have recently finished here in Ireland, I don’t think that either will have much real lasting effect. We are nearly a full four years since the onset of the financial crisis, investigations continue into Anglo and others but little is being done. It really is not acceptable.
The culture within banks is so poor for one reason and one reason only; they have complete contempt for the rules and those in place to enforce them. Unless this changes, we will revisit this type of episode time after time. Rules and Regulations are little use unless they are effective and unless there is adequate and meaningful deterrent, they will never be effective.
The only way to have adequate deterrent is to make example of those that break the rules.
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Good article Nick. I always enjoy reading your pieces.
There is a distinct theme with the banks, that we mustn’t question what they do. Just feed them more money (without conditions or any chance or return) and let them get on with it. It’s all too complex for mere mortal brains to comprehend. Oh and we mustn’t scare “the markets” or they will punish us so badly.
Why have no bankers been prosecuted for this crisis? Not just here, but in any western nation.
There is a public view that this crisis has resulted from neo-liberal policies and that politicans are dancing to the bankers tune. In fact, it is bankers that have been dancing to the politicans tunes.
Under the fiat currency system employed by Euro, Dollar, Sterling etc, new currency is issued as debt.
To maintain stabilty & growth, rates of monetary and credit/debt expansion must increase. Monetary expansion is increasing at expotential rates.
Bankers have facilitated this lunacy. That is why they are not and cannot be prosecuted.
Former Pfizers VP, Chris Martenson, offers a more lucid explanation of this.
http://transitiontownsireland.ning.com/video/crash-course-chapter-3
“Why have no bankers been prosecuted for this crisis? Not just here, but in any western nation.”
Apart from in Iceland, and look at them now … doing pretty well on the way to recovery as it goes.
A better explanation from Chris Martenson of the problem with fiat currency systems.
http://www.youtube.com/watch?v=p3_Q1SiRN-A
I.d include politicians and regulators in that list to. I can’t believe nobody has been held to account but when they’re friends/ allies are still in the dail is their a political will to do so. Or is the dail afraid of what will come out.
Denis o’Brien, the richst man in the country flew out, at his expense, Sean Fitzpatrick of Anglo Irish and PJ Mara, FF’s leading back room force and 3 time Director of Elections, basically their leading strategist for 30 years, off the three amigo’s went to Poznan.
FF stands by those who stood by it, ie coughed up over the years. They have appointed 3/4 of the judges etc over the last 30 years. The leverage and influence that will be brought by the great and good of the party to keep their donors out of trouble will be immense.
You can’t expect the system to work the way u want it to, when much of it is in those jobs due to a rotten party putting it there. Payback is a bitch and FF are calling to collect.
This country is too small. The bankers know the politicians and whatever dirty dealings which may have taken place. Hence why no examples made of them. The s**t would hit the fan
Put transgressors in prison by all means but don’t find a scapegoat and make an example of them. All that happens then is the remaining transgressors heave a sigh of relief and keep their heads down for a few months.
Ditto for Competition Law Enforcement in Ireland. Why are the regulators, the highest echelons of the civil service and Fine Gael so hell bent on protecting big business that is combining to steal circa €4billion per year from consumers / taxpayers. With regard to CRH why has the Competition Authority, ODCE, Ansbacher Inspectors, Moriarty Tribunal, Ivor Callely’s Joint Oireachtas Committee, a string of high profile ministers, past Taoiseachs and now Taoiseach Kenny and Ministers Perry and Bruton to me but s few provided immunity for a company that has been immersed in illegal and criminal activities for decades.
It is time to start taking white collar crime seriously in Ireland – remember Seanie Fitz and his merry men.
Hi, I think the photo is actually of a protest that took place.
I hope so, because the thought of it being genuine just makes me feel sick… :-/
Hi Donncha/Mattoid, I think you’re right. The photographer had that caption on it but I think he might have not gotten the joke… Changed now, thanks a million, Susan, Editor.
It won’t happen for one very simple reason…we as a race are.morally bankrupt and have too many self-interests to bother with the “common good”.
The “I’m alright Jack” mentality is alive and well across the globe.
Add to that the very stark truth that the majority of governments are just as culpable, if not more so, then I am afraid true justice will never be served unless some global anarchic event takes place.
“we as a race are.morally bankrupt” says the man with a Scottish Saltire for his avatar and he may be right about the Scots.
Nothing will change until politics in Ireland changes and the only people who can change the political mind set in Ireland are the voters of Ireland. Remember that next time you see one of your elected representatives and ask them why 4 years on we have no answers and no one has been held accountable for their actions.
Nick Leeson’s analysis will appeal most to those that possess only elementary analytic abilities.
The narrow focus of the piece misses the totality of the prevailing situation and thus its conclusions are as useful as a chocolate teapot. It makes no mention of the forces acting upon the legislature from lobby groups, business interests, vested interests of lawyers manifest in the laws, the oligarchy created by money etc.
I hope that once the totality is examined we will get ideas about policies that will work instead of more arguments in favour of bolstering policies already proven to be failures.
I’ll second that..there are a queue of replacements panting for those positions..the problem is systemic, and if you don’t address it at system level you are shuffling deck-chairs, and steaming on up the north face of the iceberg. The system is based on collective imperial crime and depends on cyclic boom/bust from which the ‘players’ extract on both sides of the cycle through their hedged bets.
My prognosis?Lets see whats left to pick up after the war..besides Einstein’s predicted sticks and stones.
There is no chance that any banker in this country will be punished. Who are we kidding for God’s sake????
Good man nick , the bit about bankers not giving a shit about the rules is bang on . There is one word that enters my head when I look at the picture accompanying this article . Grenade!
Ahh, that’s sweet… someone thinks a politician or some authority figure is gonna stand up to the bankers.. the naivety is touching..
while we’re making wishes, I’d like the poor to all be fed, an end to racism and sure, why not, actual pots of gold at the end of every rainbow…
Imagine a world where a small group of people are given all the wealth of the population to have as their own and do with it what they want and the people dare not question them or hold them to account for their greed or squandering ways because if they do, the money is hoarded as a punishment and the people go hungry. Ok now move on a few hundred years from imperialism and monarchy and realise that we are really doomed to repeat the same mistakes over and iver. The king is dead long live the royal court of investment bankers.?
Sorry nick but you lecturing us on misbehaviour is as bad as Micky Martin this morning on rte trying to score some cheap political capital at the expense of o’reilly before he got an opportunity to defend himself. Respected you a lot more when you were a ‘straight’ crook !
THE THE THE…. typos are not acceptable contrary to current lazy opinion!
While it would be the right thing to do,investigate and where wrongdoers are identified, charge them and put them on trial. It seems ever more unlikely that this will ever happen. No real attempt has been made to find the culprits. We see the images and read the stories about certain high profile characters in the finance world in Ireland,who by what is written about them certainly indicates guilt on some level or other on their part.Yet all attempts to investigate them is hindered by the institutions they worked for….or as in a lot of cases still work for.There is no intention to find these people and the present government certainly is in no rush to find them.There is hardly a single banker or financier or politician who has been truthful about these issues and there never will be.
Rate rigging is nowhere as serious a street crime , burglary or violent crime. The perpetrators should be left alone, in my view.
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