The week began with a long conversation with Sir Richard Lambert about a mooted Commission on Banking Standards, which he has been asked by assorted bank chairmen to set up. The theory is that an independent body will be better at defining the standards of service and ethics to which the banks should aspire than they could be on their own.
We shall see what transpires, though it is hard not to think this is more than another elaborate ruse to put off the day when the banks have to confront their own internal ethical conflicts and do something about them. No outside body will reform the banks unless they want to reform themselves. That will never happen as long as they continue to pay massive bonuses linked to profits rather than customer outcomes.
A more uplifting banking story came later in the week when Robert Jenkins surfaced as one of the people behind Better Markets. This organisation is suing the US Justice Department in an attempt to expose the secrecy surrounding a deal that the American government struck with the chief executive of JP Morgan whereby the bank agreed to pay $13bn (£7.8bn) in return for the Justice Department putting an end to its investigations. Mr Jenkins’ point is that as the settlement will be paid with shareholders’ money, they have a right to know how it was arrived at.
Nobody pays $13bn lightly, so just what was uncovered to persuade the bankers in the room they were well advised to settle? What exactly was the evidence? Was there enough wrongdoing to send some executives to jail? Who were the individuals involved if there was such illegal conduct? Was it right that all concerned should get civil immunity? And so on.
Mr Jenkins, now a professor at London Business School, served as one of the interim members of the Financial Policy Committee set up as part of the post-crash reforms of the regulatory structure. He used this position to direct a series of well-targeted criticisms at the banks. But his demands for higher standards eventually proved too robust for Mr Osborne who dropped Mr Jenkins and other critic, Michael Cohrs, 12 months ago. It has been suspected, though never proved, that their ousting followed concerted lobbying by the banks.
That does leave room for one final thought, however. If the banks are serious in wanting the new commission genuinely to drive better behaviour, they should offer the job of chief executive to someone who understands what they get up to, having been a banker himself, and is not afraid of them. In other words, they should offer the job to Mr Jenkins.
I suspect, however, that pigs are more likely to be seen in the skies over the City first.Reuse content