Over on the Guardian’s Comment is Free, Vince Cable gives his commentary on the banking crisis:
Last week’s banking scandals demolished a convenient myth: that the banking crash was all the fault of a few colourful rogues like Fred the Shred of RBS and Adam Applegarth of Northern Rock. We have been reminded, instead, that the rot was far more widespread. Incompetence, corruption and greed have been endemic in British banking. The RBS/NatWest computer failure illustrated the incompetence. Millions of households and firms now have to clean up the mess caused by accidental missed payments, bounced cheques and cash shortages.
Computers do crash, but RBS is far too big and it has eloquently shown the folly of over-centralised, mechanised banking systems which have sucked the life out of local, branch-based, relationship banking. We can only gaze with envy at Germany, where highly efficient, locally based, non-profit Sparkassen do what banks are supposed to do: safely channel our savings into productive investment.
The Libor scandal demonstrated deeply corrupt practices at the heart of Barclays Capital, our leading investment bank, and at others too. The public cannot understand how a corporate fine – which will be passed on to customers and shareholders – begins to address the problem.
You can read the full article here.
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5 Comments
A good article, but I disagree with Vince on one point – I understand that “ring fencing” was the best he could do, given the disposition of the Coalition “partner”. Nevertheless, a clear separation, ala Glass Steagall, is precisely what is called for. Otherwise, as the LIBOR scandal has shown, the bankers will do their level best to flout the barriers.
It won’t lead there automatically. Politicians have to work on it, change the law, put bad bankers in prison, bite as well as bark
The Tories took money from the bankers yesterday, they are taking it today and they will take it tomorrow. Labour were intensely relaxed while this was happening. There is zero prospect of the city being cleaned up under Tory or Labour led administrations – so this corruption might lead to a cleaner banking system – but not here in the UK. Someone else will learn the lessons our leaders will ignore.
Nothing will lead to a clean banking system until we stop focussing on individual banks (the law should deal with their individual crimes) and realise the system is a fraud from the top down, from No 11, One Horseguards and Threadneedle St.
See, the system, is based on the banker of bankers, the Old Lady herself, manipulating interests rates with the explicit sanction of the state, and then maintaining an exclusive cartel of super-privileged commercial banks to do its bidding. There are possible alternatives to this constant devaluation through artificial inflation system that has seen the value of our money eroded by over 98% in a century, but the odd prosecution for market manipulation or a public inquiry will not get to them because it ignores the underlying confidence trick that *is* the system.
Banking is *not* a free market. It is a state organised cartel. And in such circumstances it is hardly surprising that the participants in it act like children in a candy store gorging on other people’s misfortune. That’s not to excuse them, but to say that until we get to the root cause, we will lurch from one criminal crisis to another sooner or later.
I hav long suspected that the banking system in this country is the nearest thing we have to organised crime. After last weeks revelations it is now proven