Reaction to Deutsche Bank's record Libor fine shows we are becoming immune to the banks' disgraceful behaviour

Outlook

Friday 24 April 2015 12:25
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Bob Diamond’s bonuses ran into the hundreds of millions of pounds at Barclays
Bob Diamond’s bonuses ran into the hundreds of millions of pounds at Barclays

Remember the firestorm that was ignited when it emerged that traders from Barclays had been involved in trying to fix Libor interest rates? Overnight the company became a virtual pariah, and its chairman, Marcus Agius, was gone in a matter of days, followed by the chief executive, Bob Diamond.

Rightly so, but what we now know is that what went on at Barclays was the tip of a very large iceberg. Barclays was, in effect, sat in the middle of the class chewing gum and flicking wet pieces of paper at the teacher. It wasn’t one of the really bad kids at the back.

Deutsche Bank was. In addition to the misdeeds of its traders, it sought to impede the regulators’ investigation of their activities. It was even found to have destroyed telephone records. Even if that was accidental, it’s still the sort of behaviour that you might usually expect to go to jail for. It remains to be seen if that will ultimately happen.

But given what Deutsche Bank has been found culpable of in its settlement of the cases brought against it by various regulators, you might expect to see some sort of apology. Something like this would be just the ticket: “We are appalled at the conduct revealed by the regulators today. We sincerely apologise. Our priority is now to put this right.”

Instead Deutsche has fallen back upon the sort of lengthy, mealy mouthed and self-serving expressions of “regret” that have become par for the course in these affairs. Stressing (naturally) that no current member of the management board was involved, and trying to make capital by listing all the work it is doing to clean up.

What I find notable is that while there have been some firings, the Americans still felt it necessary to demand that certain individuals be relieved of their posts. That speaks volumes.

The real danger, however, is that we are starting to become immune to this sort of thing. The disgraceful, shameful actions of Deutsche’s traders and of their colleagues who attempted to frustrate regulatory investigations are beginning to elicit merely a weary shrug of the shoulders.

It is perhaps for this reason that JP Morgan’s Jamie Dimon feels so comfortable in writing windy letters to his shareholders moaning about regulators. Or why HSBC thinks it can reheat its threats to up sticks and leave the UK if its politicians don’t play nice, even as the authorities in several countries ready what could end up as multibillion-euro prosecutions over the activities of the bank’s Swiss unit with respect to wealthy clients and their tax affairs. Some of the reports when it did this actually talked of HSBC’s “refusal to be bullied”, without the merest hint of irony.

When you hear banks start to complain about their lot and about the way the regulators treat them, I would advise a quick read through the decision notice issued to Deutsche Bank by the Financial Conduct Authority. It illustrates what can happen when people spend too much time listening to their complaints and start playing with ideas like “light touch regulation”. Like this country did.

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