That’s an optimistic headline, obviously, as, to date, bankers have demonstrated that they are in fact above the law, and that they can do what they want — wrecking the global economy, for example, and being bailed out instead of being punished, as happened in 2008. However, in the wake of the inter-bank rate-rigging scandal that became public knowledge last week when Barclays were fined £290m in the US and the UK, the time may have come for there to be a reckoning — one which, appallingly, was avoided four years ago when the global crash happened that has poisoned our economic health ever since.
This time, perhaps, the odd high-profile scalp — Barclays CEO Bob Diamond, for example, who finally walked on Tuesday — and the promise of some sort of toothless inquiry may not be enough to quell the growing calls for the entire financial sector to be thoroughly overhauled and regulated, and for those who have committed crimes — in the many banks other than Barclays which are still being investigated — to be prosecuted.
Certainly, as Yves Smith explained on her Naked Capitalism blog, there are reasons to believe that this story has only begun in the US (where £230m of Barclays’ fine was imposed), because price fixing — of the type uncovered at Barclays, in which many other banks are also implicated — “is a criminal violation under the Sherman Antitrust Act.” As Smith noted, “The Department of Justice stressed that Barclays had been the first bank to cooperate with the investigation and had been extremely forthcoming, and for that reason it would not be prosecuted if it complied with the settlement terms for two years. The implication is that the DoJ will not be as generous with other banks involved in the price-fixing scheme.”
Smith also added a useful overview from the Financial Times of Barclays’ misdeeds:
The bank admitted that it lowballed estimates of its borrowing costs from late 2007 to May 2009 because it wanted to reassure investors of its strength during the financial crisis and it believed other banks were doing the same. It also admitted that its traders improperly influenced the rate submissions from 2005 to 2008 to make money on derivatives.
The rigging from 2007 to 2009, it may transpire, was a manoeuvre that went beyond the individual banks, and was known to some in government — or governments — as part of a panicked response to the total meltdown of 2008, but the manipulations dating back to 2005 — just to make money — look like criminal actions, pure and simple, and it will be interesting to see how widespread this activity was. At the very least, though, it signals that mere resignations may not to be enough, and that some in the City may — finally — face criminal charges.
It is certainly time. As Will Hutton explained on Sunday in the Observer:
Investment banking is an organised scam masquerading as a business. It is defined by endemic conflicts of interest, systemic amoral behaviour and extreme avarice. Many of its senior figures should be serving prison sentences …”
Hutton added that this has not happened because British regulators believed in “light touch” regulation, and, even when it became clear, after 2008, that this had not perhaps been such a great idea, very little changed. Disgracefully, the challenge of tackling financial crimes like those exposed last week was not helped by George Osborne’s decision to savagely cut the budget of the Serious Fraud Office. Hutton described the cost of financial crimes as “a tax on wealth generation and an enemy of honest endeavour — the beast that is devouring British capitalism.”
In yesterday’s Guardian, Seumas Milne followed up, bemoaning the “huge economic and social cost” of the banks’ crimes, which have revealed the world of finance to be “corrupt, incompetent, rapacious and economically destructive.”
As he proceeded to explain:
The crash of 2008 offered a huge opportunity to break that grip and reform the financial system. It was lost. The system was left as good as intact, and even the part-nationalised banks, RBS and Lloyds, have since been run at arm’s length to fatten them up as quickly as possible for re-privatisation (savage RBS cost-cutting lies behind its humiliating performance last month), instead of as motors of investment and recovery.
It is indeed truly disgraceful that the eye-wateringly huge amounts of public money pumped into the City have done nothing to help the economy, and have, perversely, just enriched bankers further at public expense. As Milne put it, the banks are “pumped up with state subsidies and liquidity that they are still failing to pass on in productive lending five years into the crisis.”
He also pointed out that “[t]he City’s claims to be an indispensable jobs and tax engine for the British economy are nonsense,” because “the bailout costs of 2008-9 dwarfed the financial tax revenues of the boom years,” and that they were “below those of manufacturing even at their peak.”
The banking sector’s role is regularly overplayed, as it employs only around a million people and only makes up only 10 percent of Britain’s GDP, whereas manufacturing makes up 11 percent of GDP and employs around 2.5 million people, but as Milne explained, the City has succeeded in creating this illusion — and largely maintaining it, despite the horrors of 2008 — because of “the unmuzzled political and economic power of the City: its colonisation of Whitehall and public life, effective grip on its own regulation, revolving-door pull on politicians and civil servants, and purchase of political parties.” As he added, powerfully, “Finance has usurped democracy.”
So what now? Is meaningful change possible, or will the parasitic and unbearably greedy monsters of the financial world keep pillaging us until they provoke some currently unthinkable revolution?
For Seumas Milne, the rate-rigging scandal “offers a second opportunity to build the pressure for fundamental change,” even if that is “hard to imagine being carried out by a coalition dominated by the City-funded Tories,” and even though Labour has “yet to break fully with its pre-crisis economic model.”
Even if Sir John Vickers’ recommendations last year — for making the banking system safer by ring-fencing banks’ retail operations from their investment components — were fully implemented (and that is a big if, as George Osborne subsequently watered them down), this “will not be enough to shift the City into productive investment,” as Milne noted, “or even prevent the kind of corrupt collusion that has now been exposed between Barclays and other banks.” As he explained, a report by Manchester University’s Cresc research team, published this week, and well worth reading, argues that “the size and complexity of the modern banking system makes it ‘near ungovernable.’”
Only if the largest banks are broken up, the part-nationalised outfits turned into genuine public investment banks, and new socially owned and regional banks encouraged can finance be made to work for society, rather than the other way round. Private sector banking has spectacularly failed — and we need a democratic public solution.
This may sound radical — or, more probably, fanciful — but unless we can mobilise in numbers that seem unthinkable at present — given the numbers of people who are worn out, overworked, indifferent, apathetic or ignorant — they are worth looking at as solutions to aim for, to hold up as a viable and crucial alternative to the current monster that deregulation and government collusion created — an alternative to prevent the robber-barons of the City of London and Wall Street from being allowed, any more, to indulge in the kind of destructive policies that have generated obscene wealth for themselves — and themselves alone — since the 1980s, and that, since the 2008 crash, have moved into dangerous new territory, in which their risk-taking is underwritten by the very taxpayers whose economies are endangered by the risk-taking itself.
In any other context, this would imply criminality and/or serious mental illness, and, as a result, it is surely time for decent, honest hard-working people’s tolerance of this savagely selfish greed and arrogance to be brought to an end.
Andy Worthington is the author of The Guantánamo Files: The Stories of the 774 Detainees in America’s Illegal Prison (published by Pluto Press, distributed by Macmillan in the US, and available from Amazon — click on the following for the US and the UK) and of two other books: Stonehenge: Celebration and Subversion and The Battle of the Beanfield. To receive new articles in your inbox, please subscribe to my RSS feed (and I can also be found on Facebook, Twitter, Digg and YouTube). Also see my definitive Guantánamo prisoner list, updated in April 2012, “The Complete Guantánamo Files,” a 70-part, million-word series drawing on files released by WikiLeaks in April 2011, and details about the documentary film, “Outside the Law: Stories from Guantánamo” (co-directed by Polly Nash and Andy Worthington, and available on DVD here — or here for the US). Also see my definitive Guantánamo habeas list and the chronological list of all my articles, and please also consider joining the new “Close Guantánamo campaign,” and, if you appreciate my work, feel free to make a donation.
My friend cosmicsurfer wrote:
Barclays is actually getting play here a bit more but as an adjunct to our own Jamie Dimon as well as the continued scamming by the majors as they pour money into the campaigns for government – the stories being tied to Romney as he goes to London to get contributions and play “King in waiting”.
The banksters are turning into a pariah to the people while the campaigning officials are holding tight to their close ties binding them to their money.
It’s interesting that the DoJ, the FBI and the Commodity Futures Trading Commission all seem to be actively pursuing this, while Britain is revealed – yet again – as Crooks Central, with no effective regulatory presence or even the vaguest sense of accountability. I’m not suggesting for a moment that Wall Street wasn’t – isn’t – a law unto itself, with a looming presence in government, but there certainly appear to be organizations and individuals with a statutory requirement to deal with this who are doing just that. Perhaps we’ll need British journalists to keep an eye on what’s happening in the US!
I actually believe the British Journalists with SOME of the papers and with the BBC might do the US well by focusing here.The universe knows, our MSM is far from accurately portraying the corporate manipulation of government since they are part OF the corporate manipulation of government. I find more truth from Al Jazeera than from CBS, BBC than from NBC, Der Spiegel than from ABC…BUT when it comes to Barclays, we might just find more on the internet than from any mainstream.
Interesting listening to Bob Diamond being grilled by MPs, and reflecting that he has been paid over £300,000 a week, every single week, for his last six years at Barclays. That’s £30 every minute, for every minute of his existence, or, looked at another way, that’s £1,800 a hour, for every hour of the last six years. How is that justifiable?
Dejanka Bryant wrote:
It isn’t, Andy. But this corrupt system started with Labour government. Conservatives inherited it from them.
Yes, most politicians have been seduced by the bankers’ claims of their own importance – and the Tories are even more enslaved than Labour, as so many major donors are in the City – but I simply can’t bear the amounts of money involved, Dejanka. There, at the hearing, was a generally useless bunch of MPs, paid around £250 a day for a five-day week, up against Diamond, paid £60,000 a day for his five-day week, in which he apparently knew nothing about anything until a few weeks ago.
Is there anything you don’t cover? Btw, yves is a woman. See her and Matt taibi on bill moyers show last week.
Thanks, Mark. Well, you know, with the state of the world as it is, it would be unforgivable not to care about the thievery, and the false austerity. We’re heading towards very dark times indeed, I fear, unless a lot of people wake up. Dark, medieval-style times …
Dejanka Bryant wrote:
I have no respect for both parties whatsoever, Andy. Labour ruined completely our NHS. It is now on sale to corporations, signed by Tories.
Jennah Solace wrote:
Great article! Really enjoyed it. God, I wish the world could change its ways, but at this very moment, I am classifying myself as one of the ‘worn out’.
Dejanka Bryant wrote:
I’ve just read it. Excellent. Sharing, Andy, thanks.
Thanks again, Dejanka, and great to hear from you too, Jennah – I’ll give you a short amount of time to be “worn out,” but nothing more!
To be honest, the more this goes on, the more depressing it is. There’s not been a lot of interest in this article, sadly – I hope because people were reading about Bob Diamond’s lies elsewhere, and not because of a lack of interest. Don’t forget that statistic – every hour, for the last six years, Lying Bob has been paid £1,800, and that’s obscene and insulting and intolerable.
In the meantime, the Olympic bandwagon is rolling into town, with its social cleansing, its militarism and its taxpayer-funded blank cheques, while the poor and the ill and the young and the disabled and the unemployed are being pushed into abject poverty and misery, and there is barely a murmur of dissent.
Jennah Solace wrote:
How does one become unworn? I am open to suggestions. I think once the threads start unraveling, it is virtually impossible to put them back together again — unless of course, you cut the good pieces off and make something new with them — like a quilt!
I think you’ve answered your own question, Jennah! But more seriously, one becomes “unworn” simply because those of us who understand that there is injustice must not allow ourselves to stand by and do nothing, whether out of religious conviction, or simply through a desire to make the world a better place. I know you know that, by the way. It wasn’t meant to be a sermon …!
Richard Osbourne wrote:
Right on, Andy. Right on.
Jennah Solace wrote:
Perhaps, unlike most people – I enjoy a good sermon – especially when it rings of the truth and speaks to the heart, so thanks
You’re welcome. Somehow I thought that would cheer you up, Jennah.
And thanks also, Richard, for the encouragement.
[...] Andy Worthington, “Criminal Bankers Are Not Above the Law” [...]
The Police Corporation is not above the law
The Courts are not above the Law
The Bankers are not above the Law.
So why have they all got away scott free? Because they are all working agents of the same corporations that deceptively run all these and more organisations.
Me I am disgusted and wish to see this charade torn apart systematically.
Thanks, Mik. Very good to hear from you, and I wholeheartedly agree.
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