Ben Chu: It was lobbyists' influence that fostered this crisis

The banking lobby is a machine to turn profits into influence into rules to help keep profits high

Share
Related Topics

What on earth did the banks need the services of firms such as Bell Pottinger, Finsbury and Lansons for? Britain's massive financial institutions surely have more than enough access and influence without the need to hire lobbying and public affairs firms to smooth the way.

As The Independent revealed last month, senior bankers met Treasury ministers nine times in the weeks after the publication of Sir John Vickers' report on structural reform of the sector last September. David Cameron's personal business adviser, Tim Luke, is an alumnus of Lehman Brothers and Barclays Capital.

When the banks want the ear of a minister, they don't need to hire anyone – they only need to pick up the phone. And yet six different firms were hired by RBS in 2010. It all looks like another case of a taxpayer-owned bank wasting public money.

But there's a logic to the banking sector's obsessive cultivation of its political connections. The banking lobby is part of a machine that has traditionally functioned by turning large profits into political influence which, in turn, is transformed into legislation and regulations that help to keep profits high.

Last month, one of Britain's top regulators, the chairman of the Financial Services Authority, Lord Turner, described in an interview with Prospect magazine how US financial lobbyists deliberately exerted their influence over members of Congress to starve American regulators of the funds they need to perform their oversight of the system.

"If I were American, would I be worried about... the power of big lobbyists in general and the financial system in particular? Yes, I'd be hugely worried," he said.

And what of British politicians? Here's how Lord Turner summed up the problem before 2008: "There was a belief that light-touch regulation would make the City bigger, and that the City was a source of employment and tax revenue in particular. And therefore there was clear pressure on the FSA at times to say, go easy on the City." And what did that disastrous mindset say to our political leaders? Look to the influence of the indefatigable financial lobby.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public," wrote Adam Smith in The Wealth of Nations. Today, one suspects, he would find the biggest conspirators against the public interest lurking in the sprawling financial lobby.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Junior Quant Analyst (Machine Learning, SQL, Brokerage)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Day In a Page

Read Next
Mosul dam was retaken with the help of the US  

Air strikes? Talk of God? Obama is following the jihadists’ script

Robert Fisk
 

Next they'll say an independent Scotland can't use British clouds...

Mark Steel
Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape