James Moore: Mixed messages to the world's biggest banks

Outlook It seems increasingly likely that Royal Bank of Scotland will be doing its metaphorical "perp walk" within the next couple of weeks. At the end of it, there'll be an $800m (£500m) fine for its role in the Libor fixing affair, the lion's share of which will be handed to US taxpayers. I understand that Britain's Financial Services Authority may account for just £100m of the total.

The FSA, of course, will effectively be fining the taxpayer, because the taxpayer owns RBS. Because George Osborne is planning legislation to ensure that any fines imposed on banks go into government coffers – they used to be used to reduce the fees of other regulated firms – it's all swings and roundabouts really.

You might then think that, as far as the FSA's part of the fine goes, it's all rather pointless. But the watchdog can hardly be seen to let the bank of the hook. It would send out a very bad message if it did. RBS is a regulated firm that allowed its traders to cheat. It has to be punished, and levying a fine is the only option open to the FSA. It needs the message to be heard by its other "home" banks.

In that context, the attitude displayed by US regulators to their "home" banks is interesting. What the trader known as the "London Whale" got up to at JP Morgan was a long way from the sort of out and out cheating indulged in by the City's network of Libor traders. But it was still pretty appalling. The Whale was allowed to build up such an enormous position in derivatives that London's hedge funds were queueing up to attack it. It was so big, they'd have needed to be half asleep to miss it, and JP lost billions.

The bank was lambasted for deficient governance, ineffective internal audit processes and inadequate management of its financial models. Senior management were accused of failing to provide adequate information to directors.

And the bank's punishment? There will be no metaphorical perp walk, and no fine at the end of it. JP was told to sharpen up its procedures and then sent to the naughty step.

One might ask what sort of message America's financial watchdogs are sending out to their "home" firms with that.

News
i100'Geography can be tough'
News
newsVideo targets undecided voters
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
tv
Life and Style
Cooked up: reducing dietary animal fat might not be as healthy as government advice has led millions of people to believe
healthA look at how governments started advising incorrectly on diets
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

DevOps Engineer - (Linux, Shell, Bash)

Negotiable: Harrington Starr: DevOps Engineer - (Linux, Shell, Bash)DevOps Eng...

Calypso Developer

£500 - £700 per day: Harrington Starr: Calypso Developer Calypso, J2SE, XML, ...

Day In a Page

Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
Rachael Lander interview: From strung out to playing strings

From strung out to playing strings

Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
The science of saturated fat: A big fat surprise about nutrition?

A big fat surprise about nutrition?

The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
Emmys 2014 review: Can they genuinely compete with the Oscars

Can they genuinely compete with the Oscars?

The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
On the road to nowhere: A Routemaster trip to remember

On the road to nowhere

A Routemaster trip to remember
Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

Hotel India

Mumbai's Taj Mahal Palace leaves its darker days behind
10 best pencil cases

Back to school: 10 best pencil cases

Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

Arsenal know battle with Besiktas is a season-defining fixture

Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

Pete Jenson: A Different League

Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
This guitar riff has been voted greatest of all time

The Greatest Guitar Riff of all time

Whole Lotta Votes from Radio 2 listeners
Britain’s superstar ballerina

Britain’s superstar ballerina

Alicia Markova danced... every night of the week and twice on Saturdays
Berlin's Furrie invasion

Berlin's Furrie invasion

2000 fans attended Eurofeurence
‘It was a tidal wave of terror’

‘It was a tidal wave of terror’

Driven to the edge by postpartum psychosis