The revelation that Barclay's bank has been manipulating the LIBOR rate confirms what we've suspected for some time: the big banks are crooked and are not to be trusted. The Government may or may not be about to do something about it but I'm not holding my breath. A Parliamentary Inquiry is by definition run by politicians, all of whom will have differing political agendas, and it will consequently lack a clear focus. We saw how disjointed Bob Diamond’s questioning was at the Treasury Select Committee hearing on 4 July.
It has been somewhat pathetic for George Osborne to attribute the blame for the LIBOR manipulation to the previous administration. The deregulation of the financial sector took place under a Conservative government during the 1980s (the so-called ‘big bang’) and, had the Conservative Party continued in government after 1997, regulation of the financial sector would have had the same ‘light touch’ now being criticised by Mr Osborne. Moreover, had the Conservatives won the 2005 general election, Michael Howard would have been Prime Minister and Oliver Letwin would presumably have been Chancellor. Mr Letwin is paid some £1,200 per week as a non-executive director of N M Rothschild’s investment bankers so I think we can guess in which direction his sympathies would lie. Mr Osborne also has connections with Rothschild’s. Further deregulation rather than closer scrutiny and better regulation would have been forthcoming, and I doubt whether Messrs Howard and Letwin, or Mr Osborne, would have done anything differently to Gordon Brown and Alastair Darling in trying to deal with the banking crisis of 2007/2008. Mr Osborne should not be trying to score party political points. As Chancellor he should be putting right the failings of the financial sector and concentrating his efforts on restoring the public’s faith in not only the financial system but also government’s willingness and ability to manage it.
David Cameron won't be doing anything substantive to reform the banking ‘industry’ and financial sector. His inherited fortune and privileged upbringing arises substantially from his antecedents’ exploitation of tax havens and financial transactions. This no doubt explains his opposition to the idea of a ‘Robin Hood’ tax. Moreover, he was Special Adviser to the Chancellor, Norman Lamont, in 1992 at the time of ‘Black Wednesday’. One wonders what half-baked advice Mr Cameron was giving the Chancellor that led to a £9 billion loss to the Exchequer in a single day! Typically, he has had nothing very much to contribute in connection with the current farrago of mismanagement, ineptitude and corruption, preferring instead to attempt to obfuscate the issue by raising (again) the question of a referendum on membership of the EU, and attempting to lay the blame for the financial deficit on the shoulders of Housing Benefit recipients under the age of 25.
But we can do something about it directly. Given that what bothers banks most is losing money, we can move our money away from the gangsters in the 'big five' to more ethical providers. See Move Your Money for more info and links.