MPs are right - banks need tougher regulation

Despite actions that have cost billions of pounds of taxpayers’ money, no senior bank executive has yet been tried for what may have been the biggest fraud in history

Share

Two years ago, the then chief executive of Barclays, Bob Diamond, told the British public that the time for “remorse” for bankers was over. We begged to differ.

The time for remorse or, for that matter, for forgiveness, was nowhere near. Not when those at the top of our banks were still earning vastly inflated pay packets. Not while those who helped wreak such havoc on the British economy and people’s livelihoods were still enjoying the rewards of their disastrous careers, and not while Mr Diamond’s own bankers were still, as we subsequently learned, cynically rigging the key Libor rate to boost their bonuses.

This week one of the alleged Libor miscreants was charged with conspiracy to defraud. This charge, which carries a custodial sentence, was lodged under laws that have been around for a lot longer than the jury members who will decide his fate. And for those doubtful about the parliamentary Banking Commission’s key recommendation this week – for legislation making it easier to jail senior bankers – that is a crucial point. Laws already exist. It is not a good idea to make a special case for one industry.

The doubters are wrong, however, on many other fronts. Despite actions that have cost billions of pounds of taxpayers’ money, no senior bank executive has yet been tried, let alone jailed, for pulling what may have been collectively the biggest fraud in the history of capitalism. Such a statement cannot be made, or even countenanced, about any other industry. The perception that justice remains undone has broken the link between the banks and the community they are supposed to serve.

The total absence of bankers in handcuffs reflects in part a lack of will on the part of prosecutors. But their reluctance in turn reflects the difficulty (and expense) of proving that any one person was criminally negligent. Time and again the Commission heard bankers testify along the lines of “not my job, Guv”. You can see why prosecutors hesitated.

The conclusions of the Banking Commission have much to recommend them, not least because they would create structures and accountability within banks that would make  prosecutions possible in the future. Whether bad bankers are actually jailed or not, however, the hope must be that the very real threat of a three-year stretch would discourage the taking of irresponsible risks in the first place and ensure that senior executives understood what was being done on their patch. Peripheral though it might seem, the idea that more women on the trading floor might reduce the risk-taking should also be taken seriously. 

Critics object that such measures could lead to a culture of playing safe. We would argue that such a change might be no bad thing. With the number of unregulated territories overseas becoming fewer as countries tighten up their banking regulation, it is not unreasonable to hope that if the UK managed to reinvent itself as the world’s most trusted and responsible environment for financial services, more businesses might be drawn to work here. The effect does not have to be negative.  

The real danger now is not that the Commission’s recommendations stand to harm British banking – the industry has done enough damage to itself unaided – but that the proposals will be watered down, or even shelved, because of opposition from the banking industry. We have waited too long to see a report that will make banking truly better. The Government must ensure the medicine stays strong.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Ashdown Group: IT Project Coordinator (Software Development) - Kingston

£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Ashdown Group: Accountant - London - £48,000 - 12 month FTC

£40000 - £48000 per annum + bonus + benefits: Ashdown Group: International Acc...

Day In a Page

Read Next
 

If I were Prime Minister: I'd shrink the gap between the highest and lowest paid

Marina Warner
 

Sorry Britain, but nobody cares about your little election – try being relevant next time

Emanuel Sidea
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power