Who’d want to admit to working for a bank after the past few days.
- Natwest’s payments systems went down, leaving customers unable to confirm how much money they had in their account or to make payments.
- Barclays then dropped the bomb, admitting to being fined £290 Million (!) for manipulating the BBA Libor Rate.
- Then banks were found to have mis-sold business rate swaps to small businesses.
Ed Miliband, Leader of the Opposition, is calling for a Leveson-style public enquiry into the whole banking saga since the Credit Crunch of 2008.
All this after the banks had begun to think the time was for the public to “move on” from the anger of the Credit Crunch, and the Occupy protests had been moved on from outside St. Paul’s Cathedral.
While there is much anger about the banks, and a common belief from everyone I talk to that once again “They’ll get away with it”, not much understanding about the implications of what has happened.
The BBA Libor rate is the rate at which banks lend money to each other, and also the rate often used to set loans and interest rates charged to us on products the banks sell us. It’s important this rate is fair, and since it’s a mean of rates used by various banks, it should compensate for any oddities at any specific bank.
If one bank had rigged their Libor rates when reporting them to the British Banking Association, the mean should have balanced that out. However, if everyone has been lying about their inter-bank lending rates (which, I stress, has yet to be proven) then the whole figure is incorrect, as is, potentially, every rate set to us as consumers. And the suspicion is this has been long going on before the credit crunch.
It gets worse than that. If underlines the lack of morality and implication of their actions at the heart of British banking. To a group of bankers, it may be just manipulating a number or two, changing a decimal place. But these numbers affect the transfer of millions of pounds around our economy. The lack of foresight as to what a small change of a number represents is staggering.
Even if you believe the “just a couple of rogues” argument, at the very least it shows failure of Barclays’ internal auditing practices, plus the (supposedly) more thorough external audit at the financial year-end. Is it that auditors were negligent, or simply don’t understand some of these practices so don’t bother checking them?
Banking – at least at the corporate level – seems to rely on a unique set of individuals – ruthless, calculating, self-centred, devious. These traits can be used to an advantage when it comes to trading, trying to read the behaviours of the market, get to the right side of the deal, hungry for the advantage. However the negative of these sets of behaviours is that these people, by their very psychology, are the least likely to be apologetic or repentant now that the whole system appears to be falling around them.
People are calling for various people to be sacked – the head of Barclays for example – and others to be charged. But how to fix the system? Now we have a whole industry (mostly) full of egos and arrogance, can’t easily be fixed by changes of cultures or change of management, for the people concerned genuinely don’t feel they’ve done anything wrong. Quite how you fix a problem like psychology is a question deeper than many are prepared to ask. And until this is addressed, don’t expect anything to change.
If anything, this whole saga highlights the ugly and amoral side of a capitalist society. And that truly is a saddening thought.