Ranting into the ether about banks

[ursus arctos]

Ranting into the ether about banks

A good piece from Jonathan Freedland.

Diamond truly has no shame. And the UK appears to be without a Joseph Welch to make that clear to all.

[Tubby Isaacs]

Ranting into the ether about banks

Very good.

Some boy wonder Tory MP called Matt Hancock was blaming Labour for failing to establish the right culture or something.

Obviously rightwing politicians, economists and think tank have nothing to do with that. Maybe it was absent parents and rappers.

[ursus arctos]

Ranting into the ether about banks

.

[ursus arctos]

Ranting into the ether about banks

ursus arctos wrote: The FT puts the boot in.

The Barclays affair may lack the spice of some recent banking scandals, involving as it does the rather dry “crime” of misreporting interest rates. But few have shone such an unsparing light on the rotten heart of the financial system.

Behind the technical language, what has been exposed by British and American regulators is nothing less than a long-running confidence trick played on the public for personal and institutional advantage. Putting that right will take more than a few paltry acts of contrition by Barclays’ bosses and a bit of hand-wringing from the authorities.

[Ginger Yellow]

Ranting into the ether about banks

Behind the technical language, what has been exposed by British and American regulators is nothing less than a long-running confidence trick played on the public for personal and institutional advantage.

At the end of the day, though, that's what free market capitalism is. If we don't want our businesses to be run as cons against the public, we should legislate that. Because otherwise they will be.

[Tubby Isaacs]

Ranting into the ether about banks

There is legislation, isn't there? As Ursus said, there must be general anti-fraud stuff covering it.

Cameron must be cursing. He read his Thatcherite history, got Murdoch and the City on board. Not working out so well.

[Gangster Octopus]

Ranting into the ether about banks

Fingers crossed.

[Geoffrey de Ste. Croix]

Ranting into the ether about banks

Funnily enough, Cameron and Osborne have kept the Conservatives 2007 report "Freeing Britain to Compete" quiet.

A report which urged even less regulation of the banks than Labour, there are some classic direct quotes from the report on the website linked:

"The (Labour) government claims that this regulation is all necessary. They seem to believe that without it banks could steal our money..."

- "We need to make it more difficult for ministers to regulate, and we need to give the critics of regulation more opportunity to make their case against specific new proposals..."

- "We recommend deregulating venture capital fund raising, and investment for professional investors..."

- "The regulatory burden should be measured and reduced year on year..."

- "Before imposing traditional 'heavy' regulation, government should always consider whether the ends could be achieved by less burdensome means, such as through competition, incentive schemes, or self-regulation..."

- "Competition is the customers' main ally. It is competition which keeps the bank honest..."

[Gangster Octopus]

Ranting into the ether about banks

Diamonds aren't forever...

[Bored Of Education]

Ranting into the ether about banks

Apologies, Geoffrey, I have pretty much half-inched the whole of that for my FB status without crediting you but you could imagine the issues if I did

[Disco Child Ballads]

Ranting into the ether about banks

I put a link to that on Twitter as well

[Bored Of Education]

Ranting into the ether about banks

It is very much going viral so maybe Geoffrey had better furnish me with his real name for credit. You would hope that, as one sharer put it, Milliband would stand up and quote it verbatim at PMQs but, of course, New Labour's hands aren't exactly clean

[ursus arctos]

Ranting into the ether about banks

More grist for your mill from Andreou in the New Statesman.

Includes a link to the Tory statement.

Tucker's got some 'splainin to do, now that Barclays have released a contemporaneous note of his 2008 conversation with Diamond in which the man from the Bank tells Bob that Barclays increasing its quotes to actual funding levels "would be worse" that what they were doing.

[E10 Rifle]

Ranting into the ether about banks

I've nicked Geoffrey's link for my FB status, and will put it on That Twitter too.

I'm find Merve the swerve King's role in all this a matter of some fascination too. All this mad shit going on, and this poor powerless minion knew nowt about any of it, and did nowt to stop it.

[NHH]

Ranting into the ether about banks

There's a piece on FT's Alphaville showing that Barclays are saying Tucker told Diamond that the pressure to lower the rates was generated in Whitehall - that takes the chain right to Darling and ultimately Brown, given we know he was intimately involved in micromanaging the HMG response.

This is Leveson II, only so much more important - it's got the potential to unravel the ideological consensus that underpinned the policy approach to banking and the economy which whilst Labour will be right in the firing line of, will implicate the Tories too.

The danger is that without the Dowler moment, it doesn't present the powers that be with a clear pressing need to do something; this is really important, but it's also not got the shocking dimension that makes it a national story of importance to people. Someone needs to trying to link these decisions to the real impact on the economy; Mason's started this on his latest blog, showing how the Barclays approach sucked money away from industry, but the fact that much of this is technical, arcane and requires a pretty high-level of policy literacy, it's really hard to do.

[E10 Rifle]

Ranting into the ether about banks

Absolutely. What's needed though, as you say, are some shit-hot individual case studies - of, say, a small business here, a repossessed mortgage holder there - that crystallise this whole scam in the public mind. The political reputations, on all sides, that may be barbecued in this process are a tiny price to pay.

[Ginger Yellow]

Ranting into the ether about banks

Thing is, it's not really about individual mortgageholders or businesses. In fact, most mortgageholders were probably marginally better off as a result of Libor being kept artificially low. It's about a vast book of derivatives where a couple of basis points on a particular day adds up to millions of pounds of profit or loss for the desk.

[ursus arctos]

Ranting into the ether about banks

Great toy for LIBOR nerds.

So that would be me and GY, basically.

[ursus arctos]

Ranting into the ether about banks

Paul Mason has a good piece today.

Here is the central problem with Barclays. Its business model has become heavily reliant on the kind of investment banking Bob Diamond pioneered at Barcap, a division he created and was determined to lead to global dominance until Alistair Darling impolitely stopped his acquisition of Lehman Brothers in September 2008.

Since 2008 the Barclays story has been less about global domination but survival. It refused to take money from the British state. Bob Diamond was central to that resistance.

Instead it took money from the Gulf monarchies of Abu Dhabi and Qatar, diluting the value of existing shares. Then, as new regulatory and capital adequacy demands were stacked up, by politicians desperate to close the stable door after the horse had bolted, Barclays became an outlier among large British banks. It lacked the global reach of HSBC and Standard Chartered. It lacked the state backing of RBS, HBOS and Lloyds.

The results have been felt in every community in Britain. Four years ago, Barclays was lending £52bn to non-finance, non-property businesses in the UK, 27% of all loans.

Now the figure is £38bn, and just 16% of business loans. In the process the bank - single handedly - has taken £3bn of capital out of manufacturing, more than £3bn out of retail/wholesale, while ploughing an extra £10bn into home loans and £6bn into property.

There isn't going to be a Dowler Moment here (unless some photogenic middle class family were on the other side of a billion pound bet with Barclays traders), but I think that the combination of bonus bashing and the cutbacks in its lending to small and medium businesses has potential.

[E10 Rifle]

Ranting into the ether about banks

A wry smile at the fact that Barclays appeared to ideologically resist the idea of taking money from a democratically elected government, but bit the hand off similar contributions from autocratic ones. Seems quite revealing, really.

[caja-dglh]

Ranting into the ether about banks

ursus arctos wrote: Great toy for LIBOR nerds.

So that would be me and GY, basically.

Am I getting kicked out of the Finance nerd club as well?

[ursus arctos]

Ranting into the ether about banks

I figured you already had made your own . . .

[ursus arctos]

Ranting into the ether about banks

The Mail goes after Diamond with gusto.

Tasteless, reckless, American, with foul mouthed hip hop children, and, as if that isn't enough:

[E10 Rifle]

Ranting into the ether about banks

Ah man, what a picture.

Must be preserved for ever, that, so that when future generations ask "what was wrong with Britain in 2012" we have a shorthand illustration.

[Tubby Isaacs]

Ranting into the ether about banks

NHH wrote: There's a piece on FT's Alphaville showing that Barclays are saying Tucker told Diamond that the pressure to lower the rates was generated in Whitehall - that takes the chain right to Darling and ultimately Brown, given we know he was intimately involved in micromanaging the HMG response.

It's a bit funny then they didn't mention this when they were being hit for £60m by the FSA.