Another week, another banking scandal: on Friday, a day after the Swiss bank UBS announced it had lost the staggering sum of £1.3bn, one of its star traders appeared in court charged with fraud and false accounting. The hugely embarrassing announcement from UBS came three years to the day since the collapse of Lehman Brothers, suggesting not much has changed in the high-risk world of casino capitalism.
Initial reports concentrated on Kweku Adoboli's lifestyle, which sounded par for the course for a young man with a well-paid City job – long hours, flat in fashionable Stepney, parties. For once, though, the narrative of an abrupt fall from grace rang hollow. It isn't as though the big banks disapprove of the kind of casino capitalism its traders get involved in; on the contrary, they seek out and encourage risk-takers, rewarding them handsomely as long as they make huge profits.
The people who work on "delta one" desks at big banks bet on the direction of share prices and other assets. It's what Jerome Kerviel did at Société Générale in Paris in 2008, eventually losing the bank an eye-watering £4bn. But if he'd made that amount no one would have batted an eyelid. These young men (they mostly are men) don't make anything useful and they don't improve the lot of humanity one jot; they're gamblers, pure and simple.
Three years into the world banking crisis, there's still a tendency to hate "bankers" in general while having a fascination for the high-octane lifestyle of City traders. That's why people buy books like The Wolf of Wall Street by Jordan Belfort, a broker who ended up in prison, with its front-cover boast that "I partied like a rock star and lived like a king". Labour's former City minister Lord Myners had a different author in mind when he made a speech in the House of Lords about banking last week, quoting Hunter S Thompson's assessment of the music business as a "shallow money trench ... where thieves and pimps run free and good men die like dogs". Myners added drily: "As he is claimed to have said, it also has a negative side."
That negative side includes destroying jobs among people employed in the banking sector and beyond, and reducing the value of pension funds. UBS had to be bailed out by the Swiss government in 2008, and only last month it announced 3,500 job cuts. Last week's loss is expected to lead to more job cuts, while a drop in the value of UBS shares is likely to affect pensioners whose funds are invested in the company.
It's shocking to most people that the decisions of a handful of traders can have massive effects on their lives yet the Government endlessly delays regulation; only last week, following publication of the Vickers report, the banks were given an astonishing eight years to ring-fence their high street functions from their riskier investment operations.
The language of morality comes easily to David Cameron when he's talking about young people breaking into Comet, but it's different when financial institutions encourage reckless behaviour. How many reminders does the PM need that the culture of risk among City traders is one of our most urgent moral problems? Riots destroy property and lives in a limited area, but this white-collar vandalism threatens entire financial systems.
Joan Smith is Political Blonde www.politicalblonde.com
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