Saturday, 24 October 2015

Osborne as soft as Brown on big banks

James Moore writes of the cop-out provisional report from the Competition and Markets Authority on banking (pdf here).

The only thing these findings are not is surprising. They are perfectly in tune with everything else that has been going on in the regulation of banking since the General Election. Martin Wheatley, the tough as nails boss of the Financial Conduct Authority? Ousted. The “presumption of responsibility” that would have required bankers to prove they had taken reasonable steps to prevent wrongdoing? Dropped in favour of a nebulous “duty of responsibility”.

Meanwhile, nearly every bank in Britain is applying for “transitional waivers” that they hope will allow them to get out of the requirement to ring-fence their retail banks from the wilder, and riskier, fields of investment and corporate banking. Despite the fact that the rules won’t come fully into force until 2019 and that they were trailed way back in 2011.

What still does surprise (a bit) is how short our memories have become. We are just seven years past a banking-led financial tsunami that very nearly destroyed this country’s economy, and I don’t use that term lightly. [...] “Never again” was the cry at the time, and small wonder. There were promises of new rules to make sure of it too. Ministers’ feet were held to the fire by a succession of ugly scandals, left stinking in the sunlight when the flood waters of crisis had subsided.

These are with us still. Investigations are ongoing into precious-metal price-fixing. In the past few days, a French bank – Credit Agricole – paid nearly $800m to US authorities to settle a sanctions busting investigation. Some of the payments it tried to hide went through its London office*.

Still banks drag their feet on PPI.

And yet this appalling behaviour now seems to generate merely a resigned shrug. Oh what, banks again? [...]

All the while the masters of the financial universe are getting more comfortable. We may have cause to regret that.

* This was happening at the same time as Lehman Brothers made use of slack financial standards in London in order to trick its investors.

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