The problem will get worse when the Government admits that the present system of self-regulation is dead in the water. It has been an unconvincing sop to public opinion since the first self-regulatory body, the Takeover Panel, was set up in 1968, following the awesomely dirty fight between Messrs Murdoch and Maxwell over the News of the World. The City's increasingly elaborate self-regulatory machinery has removed the only sensible argument against official regulation - that it would be clumsy and bureaucratic.
The Government has no reason to love the City, and its attitude will undoubtedly be hardened by the pathetic sight of Sir John Cuckney going round with his begging bowl on behalf of the pensioners Cap'n Bob left in the lurch. The vast majority of the brokers, lawyers, accountants and bankers for whom the gallant captain was a nice little earner will simply sit on their hands - and wallets.
Even if they had coughed up, however, the Maxwell affair would finally have destroyed the never- very-solid case for self-regulation. It was already reeling from fatal flaws in almost every financial sector, from the regular bombshells exploding at Lloyd's to the fact that life insurance salesmen still do not have to explain in words of one syllable just how much they and their employers take off the top of punters' premiums.
Which leaves the biggest problems: the form that any regulatory body or bodies should take and, more importantly, who should staff them. In 1934, President Roosevelt appointed the late Joseph Kennedy to head the newly-formed Securities and Exchange Commission. At the time, the godfather of the Kennedy clan was best known as an ex-bootlegger and stock market operator. A reputable British equivalent, someone who knew both politics and the City, could be a figure like the recently ennobled Peter Walker or Lord Donoughue, adviser first to Lord Wilson and then to Robert Maxwell.
This still leaves the much more intractable problem of staffing a British SEC - and beefing up the staff of the fraud office. In the United States there is a simple solution: keen young lawyers who are interested in public service or anxious to get a bit of government duty on their CVs before they make their fortunes in the corporate sector. Over there it is perfectly normal to switch between the public and private sectors, and aspiring lawyers at the finest law schools emerge with a sense that there is a wider world to serve than narrow corporate or personal interests.
Over here, however, legal education is not hot on ethics, and the big City law firms are a world away from the sort of law where experience in the fraud office would help. So City spivs can rest assured that their livelihood will not be threatened in the foreseeable future.Reuse content