A Banking 'Leveson' ePetition

[ahinton]

http://hypocritereader.com/17/the-ne...nancial-reform

The heightened rhetoric is not to my taste, but it makes for quite interesting reading.

Ah, you're still here, after all! Good! And yes, it does indeed make for quite interesting reading, even if some of it's a tad over-effusive. We can all point accusing fingers at regulators but, if and when seeking so to do, it perhaps behoves us all at least to try to decide first whether what one might think should be better and more effectively regulated is regulable (is there such a word?) in the first place.

[scottycelt]

http://hypocritereader.com/17/the-ne...nancial-reform

The heightened rhetoric is not to my taste, but it makes for quite interesting reading.

Interesting indeed, but I wonder if any sort of major reform has ever been considered to be free from difficulty ?

There is a lot of truth in the article, but I don't think anyone has argued that reform of the banks will end in a perfect system, or that we can do away with all risk. Investment banking will always be an extremely dodgy business whatever the system.

Surely, though, a relatively straightforward measure like separating or 'ring-fencing' retail from investment banking will avoid the type of horrendous bill that was presented to the taxpayer four years ago? It almost certainly won't prevent another self-inflicted financial crisis if history and human nature is anything to go by, but there's a better chance of ensuring that it is the financial gamblers and investment banks who will suffer in future rather than dumping much of the misery onto innocent third-parties

We shall have to wait and see exactly what is proposed, but it is difficult to envisage anything quite as unsatisfactory as the current 'heads . we win ... tails, you lose' situation that the banks enjoy at present, which is why change has its own natural momentum, and why even some top bankers have somewhat reluctantly acknowledged that some reform of the system is now not only necessary but inevitable.

[ahinton]

Interesting indeed, but I wonder if any sort of major reform has ever been considered to be free from difficulty ?

There is a lot of truth in the article, but I don't think anyone has argued that reform of the banks will end in a perfect system, or that we can do away with all risk. Investment banking will always be an extremely dodgy business whatever the system.

Surely, though, a relatively straightforward measure like separating or 'ring-fencing' retail from investment banking will avoid the type of horrendous bill that was presented to the taxpayer four years ago? It almost certainly won't prevent another self-inflicted financial crisis if history and human nature is anything to go by, but there's a better chance of ensuring that it is the financial gamblers and investment banks who will suffer in future rather than dumping much of the misery onto innocent third-parties

We shall have to wait and see exactly what is proposed, but it is difficult to envisage anything quite as unsatisfactory as the current 'heads . we win ... tails, you lose' situation that the banks enjoy at present, which is why change has its own natural momentum, and why even some top bankers have somewhat reluctantly acknowledged that some reform of the system is now not only necessary but inevitable.

You make a lot of good sense here and greater separation of retail from investment banking would - and, I hope, will - make sense, but this alone could not have prevented the wreaking of havoc for the tens of millions of victims that has been and will for years remain the outcome of that lethal combination of interest fixing and interest insurance mis-selling; better, more thorough and more heavy-handed financial product regulation and licensing might well have had a positive impact on the latter (and would be welcome in any case), but it's hard to see what could have been done to prevent the former other than fines on the culprits far more excessive than those now being imposed and, in any case, doing that after the event is nothing more than mopping up after the storm rather than preventing that storm in the first place. Furthermore, if the levels of fines that would actually stop this kind of thing recurring were actually to be imposed, the consequent damage to the banks would be so great that their clients and customers would suffer from the fallout of that instead. Short and curlies, anyone? As I wrote earlier, the biggest banks are now seen clearly to have taken that vanishingly small step from being "too big to fail" to being "too big to regulate".

[JohnSkelton]

Surely, though, a relatively straightforward measure like separating or 'ring-fencing' retail from investment banking will avoid the type of horrendous bill that was presented to the taxpayer four years ago?

I don't see that a separation wouldn't be subject to the same regulatory impasses :

But one British bank source argued that all retail banks had a division, known as the treasury department, which hedges risks just like the operation at JP Morgan. Such deals are undertaken to offset the risks of the bank’s loans and in theory are not just punts with the bank’s own money.

‘This loss was made in the treasury department at JP Morgan. That type of department could sit inside a ring-fenced retail bank,’ the source said.

http://www.thisismoney.co.uk/money/markets/article-2143424/JP-Morgan-Splitting-casino-banking-stopped-stupid-1-2bn-loss.html

That's what THEY would say, of course, but the fact of the matter is that the complexities and interconnectedness of global banking would mean enforcing any separation would be like catching eels with soapy hands. Not that I've ever tried, but I imagine it would be near impossible.

A banking 'Leveson' might be useful if only as a way of getting information about what banks actually do out more generally in the open. If the idea is to establish who is to blame then that seems rather beside the point, unless the idea is that an army of Captain Mainwarings have been locked in the vault at Barclays and are only waiting to be set free to return banking to a saner, more decent age.

[ahinton]

I don't see that a separation wouldn't be subject to the same regulatory impasses :

Actually, that's a very valid point and my remarks on the subject of separation of investment banking and retail ditto need to be tempered accordingly.

But one British bank source argued that all retail banks had a division, known as the treasury department, which hedges risks just like the operation at JP Morgan. Such deals are undertaken to offset the risks of the bank’s loans and in theory are not just punts with the bank’s own money.

‘This loss was made in the treasury department at JP Morgan. That type of department could sit inside a ring-fenced retail bank,’ the source said.

http://www.thisismoney.co.uk/money/markets/article-2143424/JP-Morgan-Splitting-casino-banking-stopped-stupid-1-2bn-loss.html

That's what THEY would say, of course, but the fact of the matter is that the complexities and interconnectedness of global banking would mean enforcing any separation would be like catching eels with soapy hands. Not that I've ever tried, but I imagine it would be near impossible.

This is very largely true, I think; the other part of the problem is, of course, that similar failures within - or indeed tacit and secretive endorsements on the part of - such banks' treasury departments can still mean that such misdemeanours can be permitted and even encouraged until such time as they're found out externally as is now the case. The only reasonab ly certain way in which regulation could hope to try to prevent - or reduce the likelihood of - such occurrences in the future would not be by means of the kind of (apparently) independent post-event censuring that's happening now but by installing incorruptible and conscientious independent monitors (if sufficient of them could even be found) in all such banks to inspect the movement of every paper clip on a 24/7 basis - and who would pay for that?

A banking 'Leveson' might be useful if only as a way of getting information about what banks actually do out more generally in the open. If the idea is to establish who is to blame then that seems rather beside the point, unless the idea is that an army of Captain Mainwarings have been locked in the vault at Barclays and are only waiting to be set free to return banking to a saner, more decent age.

I agree. The public - be they individuals, SMEs, corporations, local and national government departments, charities, the education and health systems, other financial institutions and the rest - all use and are almost wholly dependent upon the banks, so it could indeed be argued that the more information about how they operate that gets catapulted into the public arena as part of the outcome of a judicial inquiry the better; the ability of anyone to regulate, monitor or even complain about institutions' activities is inevitgably compromised by the extent of understanding of what goes on inside them. Yes, scapegoat-making is not entirely a bad idea, but the messages it might send to others will inevitably be compromised by the fact that, even though murder can result in a life sentence, it doesn't prevent more murder.

[Lateralthinking1]

I can't make up my mind about this petition. If I don't sign, it suggests I don't care. If I do, I am lining lawyers' pockets for ever more. I'd like to see the final demands of Leveson first because my fear is that they will be pitifully poor.

It also seems premature. There is a role for the EU, the United States, the British Parliament, Select Committees, the Scottish Parliament, the Welsh Assembly, the Civil Service, Local Authorities, the police, the Bank of England, the FSA and many more. I would like to see it being properly exercised without the need for an Inquiry.

What I am hearing this week is a major change. There is real outrage inside the financial industry. This time the rogues have lost their colleagues. Having pushed it one step too far, I expect a great deal more of conventional intervention.

There is also the likelihood of an increase in the number of vigilantes about which I offer no comment.

[amateur51]

I can't make up my mind about this petition. If I don't sign, it suggests I don't care. If I do, I am lining lawyers' pockets for ever more. I'd like to see the final demands of Leveson first because my fear is that they well be pitifully poor.

It also seems premature. There is a role for the EU, the United States, the British Parliament, Select Committees, the Scottish Parliament, the Welsh Assembly, the Civil Service, Local Authorities, the police, the Civil Service, the Bank of England, the FSA and many more. I would like to see it being properly exercised without the need for an Inquiry.

There is also the likelihood of see an increase in the number of vigilantes about which I offer no comment.

Dave ("where's my child?") and Gideon have indicated that they don't feel that an inquiry is necessary which seems to me to be the clincher, Lat.

By signing it you'll be adding to pressure of public clamour for something that these posh boys don't want in case it inconveniences their posh chums

[ahinton]

I can't make up my mind about this petition. If I don't sign, it suggests I don't care. If I do, I am lining lawyers' pockets for ever more. I'd like to see the final demands of Leveson first because my fear is that they will be pitifully poor.

Whilst I understgand your perceived predicament in principle, I think that the best way for you to try to resolve it is that, whatever Dace and his chums might or might not want, the likelihood of their being no public enquiry on this one is already vanishingly small, so the pockets of the lawyers would be lined in any case; I've signed the petition, although I do not imagine that such a petition will even have proved necessary in the long run in order to persuade the powers that (think they) be to instigate such an inquiry.

It also seems premature. There is a role for the EU, the United States, the British Parliament, Select Committees, the Scottish Parliament, the Welsh Assembly, the Civil Service, Local Authorities, the police, the Bank of England, the FSA and many more. I would like to see it being properly exercised without the need for an Inquiry.

Adopting an idealistic stance such as yours here is all very well, but if and when any such rôles are widely abused by any of these nations, groups of nations, institutions et al and tens if not hundres of people are affected as a direct consequence, what you'd "like to see" will not after all be visible, so what would you wish to see done about that?

What I am hearing this week is a major change. There is real outrage inside the financial industry. This time the rogues have lost their colleagues. Having pushed it one step too far, I expect a great deal more of conventional intervention.

Of what kind, by whom and to what anticipated ends?

There is also the likelihood of an increase in the number of vigilantes about which I offer no comment.

What can vigilantes do other than express their rage by causing yet more mayhem to add to that which has already been wrought?

[JohnSkelton]

By signing it you'll be adding to pressure of public clamour for something that these posh boys don't want in case it inconveniences their posh chums

Seems reasonable to me .

What I am hearing this week is a major change. There is real outrage inside the financial industry. This time the rogues have lost their colleagues. Having pushed it one step too far, I expect a great deal more of conventional intervention.

I don't know where you're hearing that from, but I simply don't think it's tenable to talk about "rogues" in this context. That's the usual get out argument for any organisation that's been caught out, the rotten apples in a barrel line. The problem is systemic, not rogue activity. I simply don't believe that anyone working at any level of knowledge / responsibility (as it were) in banking / finance isn't aware of what has been 'going on'. That the Governor of the Bank of England is shocked, stunned, appalled to the innermost depths of his being ought - if taken literally - to be incredibly scary. Where has he been the last 30 years? Cultivating his garden?

""At the time, Barclays' opinion was that those other banks' submissions were too low given market circumstances." (Diamond to Andrew Tyrie, chairman of the Treasury select committee). In other words, everyone was at it or, better, it's common practice. This can't be a shock to anyone with any significant inside (as it were) knowledge of the systems. It simply cannot be the case.

[ahinton]

Dave ("where's my child?") and Gideon have indicated that they don't feel that an inquiry is necessary which seems to me to be the clincher, Lat.

By signing it you'll be adding to pressure of public clamour for something that these posh boys don't want in case it inconveniences their posh chums

I think that it's far more fundamental than that; the "posh boys" that you mention are in positions of power in government and know very well that they'll risk being elected out of them if they do not - or are not seen to - co-operate with what is surely not merely necessary but almost inevitable.

[Lateralthinking1]

Dave ("where's my child?") and Gideon have indicated that they don't feel that an inquiry is necessary which seems to me to be the clincher, Lat.

By signing it you'll be adding to pressure of public clamour for something that these posh boys don't want in case it inconveniences their posh chums

Yes, amateur51, you are probably right. There is not even any obligation on them to debate a popular petition in a satisfactory way. I can probably sign it to demonstrate my feelings without any fear of expense to the taxpayer anyway. In the meantime, Boris Johnson's 'on your bike' London will become the least respected financial centre this side of North Korea.

I believe Dave's caring side, such as it was, coincided with the years that his disabled child was alive. Since then, it has appeared to be callousness all the way. Arguably, any lessons that were learnt were temporary and were never broadened beyond self-interest. Efficiency would be nice but then he has a very long way to go to equal the 'achievements' of Mussolini.

[ahinton]

I simply don't think it's tenable to talk about "rogues" in this context. That's the usual get out argument for any organisation that's been caught out, the rotten apples in a barrel line. The problem is systemic, not rogue activity. I simply don't believe that anyone working at any level of knowledge / responsibility (as it were) in banking / finance isn't aware of what has been 'going on'. That the Governor of the Bank of England is shocked, stunned, appalled to the innermost depths of his being ought - if taken literally - to be incredibly scary. Where has he been the last 30 years? Cultivating his garden?

""At the time, Barclays' opinion was that those other banks' submissions were too low given market circumstances." (Diamond to Andrew Tyrie, chairman of the Treasury select committee). In other words, everyone was at it or, better, it's common practice. This can't be a shock to anyone with any significant inside (as it were) knowledge of the systems. It simply cannot be the case.

You're absolutely on the button here, of course; the alleged ignorance of the present and previous governor of the Bank of England and of senior FSA staff (of whom a large proportion have been recruited from the banking world) is perhaps the most risible of all; I don't say (nor, I imagine, do you) that everyone in the banking industry has been laughing all the way to the bank at and in the confident knowledge of the apparent ignorance of the rest of us in terms of what their senior managers and directors have been up to for years, but at the same time I don't imagine that a conscientious investigatory team would have to inspect very far up that particular greasy pole to ascertain at what levels in the industry awareness and condoning of such activity actually begins.

[Lateralthinking1]

I don't know where you're hearing that from

I suppose more accurately opposition is coming from long-term supporters on the fringes. Nick Ferrari on LBC, a well respected if tabloid-esque broadcaster/journalist and one time possible right-leaning Mayoral candidate, has been doing the 'don't bash the bankers' thing for many months. Not any longer. He has had a stream of guests this week of a similar persuasion to him who have turned. He also put Johnson, with whom he is usually matey, firmly on the spot at a public meeting in Westminster.

This week on Question Time there was a guy who one would have expected to have been softly softly but he was unequivocal. And Tyrie is not at all happy. When the fear is of civil lawsuits, many from the United States, and of huge impacts on the status of the City of London, there is an immense amount of power and influence that the latest - yes, systemic - antics are now threatening. Splitting the banking sectors might now be the minor point - the entire banking industry is tearing itself apart.

[amateur51]

That the Governor of the Bank of England is shocked, stunned, appalled to the innermost depths of his being ought - if taken literally - to be incredibly scary. Where has he been the last 30 years? Cultivating his garden?

Astonishing isn't it? I think that the MPs need to give King a good bouncing around the room for these remarks.

"You knew? - then you're culpable"

"You didn't know - then you're still culpable"

And remember that Governor of the Bank of England isn't a job like any other; there appears to be a line of succession so that these people have been around the financial scene for decades, and they must know everything that's going on. Of course, you don't want a clueless person at the top but you don't want any one of the three wise monkeys either

End of rant

Later: Have you noticed too how all King's latest pronouncements have taken the form of either sailing-based or weather-based comments. As though all this shenanigans is in some way 'natural', possibly forecastable but essentially unavoidable.

[ahinton]

Astonishing isn't it? I think that the MPs need to give King a good bouncing around the room for these remarks.

"You knew? - then you're culpable"

"You didn't know - then you're still culpable"

And remember that Governor of the Bank of England isn't a job like any other; there appears to be a line of succession so that these people have been around the financial scene for decades, and they must know everything that's going on. Of course, you don't want a clueless person at the top but you don't want any one of the three wise monkeys either

End of rant

Later: Have you noticed too how all King's latest pronouncements have taken the form of either sailing-based or weather-based comments. As though all this shenanigans is in some way 'natural', possibly forecastable but essentially unavoidable.

As in "God save the King, as no one else will save this one from himself", oui? But what good will that do? - or indeed what good will imprisoning the likes of Diamond do when that will merely provide to him and his colleagues carte blanche to ply their wares from behind bars at the taxpayers expense? Making scapegoats and vilifying individuals will surely achieve little beyond the getting of seething anger off the chests of those who seek such "redress".

What is perhaps most worrying of all to the Brits is the massive damage that all of this and the eventual outcomes of the forthcoming inquiry/ies into it all will do to the City, on which so high a proportion of the British economy depends; this, incidentally, is the one aspect of the matter that most prompts me to doubt that the so-called "posh boys and their chums" are not too worried about it, because what affects the City adversely can and almost certainly will affect them more than it will affect most of the rest of us, even if only because they have more to lose, both financially and reputationally.

As to the shipping forecast according to the King, it's certainly several levels lower in credibility and presentational quality than the terrestrial ones given by the Prince, wouldn't you say?...