Why Libor fixing is more than money
I had a twitter exchange with a young man who felt sure that the fixing was limited to the 14 bad boys on the Barclay’s trading floor. I argued that it was highly unlikely and was like the fig leaf of ‘one rogue reporter’ that we all had to swallow for a while. He reckoned I was wrong.
However the LIBOR fixing turns out, and however many more are implicated, the important issue centres not on the money (well, not solely on the money). It is the dishonesty.
I have been known to rant about the system that brought us the subprime mess and collateralised debt objects. The lack of scrutiny and the light touch regulation that allowed the liberalisation of the financial markets that brought us to the brink with Lehman Brothers.
However, at its core, I still held to the belief that the main problem was greed. Good old-fashioned pocket-filling greed. You know, nose in the trough profiteering and massively over-inflated bonuses. A Gordon Gecko Wall-st ‘Greed is good’ kind of thing.
I was wrong.
LIBOR rates are used in approximately $800
billion trillion of financial instruments and messing with these is fraud on a massive scale. The courts will be busy with claims and cases over this for the next decade. The perpetrators should be found and punished on a scale comparable with the hunt for Bin Laden but we all know they wont be.
The fixing of LIBOR by Barclay’s (I’m sure they won’t be alone) is the game changer. In the same way as Milly Dowler changed the press game irrevocably.
They aren’t greedy (well they are) but they have also been found out as dishonest.
Honesty which needs to be at the heart of the system, an honesty that has been found to be an illusion. The British Bankers of the past, whose reputations were built on integrity, probity and trustworthiness, will be spinning in their collective graves. Trust once broken takes a long time to be recovered if it ever, actually, is.
The reputation of British banks has been dragged through the mire damaging much of UK PLC’s future income and its standing in the world.
Add to this ‘bad behaviour’ the mis-selling of PPI and other little gems (dodgy tax avoidance schemes for example) and we get a pattern of dishonesty not just a one-off (or a Madoff – sorry). A pattern of behaviour that renders the game a bogey. Bob Diamond was sorry. Sorry they got caught? Certainly not sorry to have pocketed £100m over the last five years.
The pathetic attempts to justify the dishonesty and misreporting of LIBOR by Barclay’s and the subsequent use of ‘Big boys made us do it’ by Bob Diamond and his chums just highlights part of the problem. The fact that the political establishment are embroiled in this mess isn’t shocking to anyone. It is almost a given. Afterall they have been involved in everything else recently.
The political classes are mired in their own mess ( expenses scandals, links with the press, donations), the press are curled up in a post #hackgate ball, the churches are continually being sued and now we find out the banks are not just greedy hogs but they are lying, robbing hogs.
The roof of our societal institutions is falling in.
With this in mind, who do we expect (or accept) to hold the banks to account? Another #Leveson and Mr Jay? Anything less will be a whitewash or politically tarnished.
Dave (By the way) is terrified at the thought.