Policy Research in Macroeconomics

E-petition launched for public inquiry into bankers’ wrongdoings

28th June 2012 Following the gentle fines on Barclays Bank for its sustained manipulation of LIBOR interest rates, Prime Director Ann Pettifor has submitted an e-petition to government for a judicial public inquiry.  The terms are as follows:

“Public inquiry into wrongdoing and ethics of bankers

We the undersigned call for an independent, judicial public enquiry into fraud, wrongdoing and ethics of British banks, their management and their staff, and the role of the British Bankers Association. This inquiry should include the manipulation of interest rates on about £225 trillion of assets. This inquiry must have full powers to compel witnesses to appear on oath, and to obtain all forms of evidence.”

We will inform readers as soon as she receives confirmation (government websites do not move rapidly!).

Ann first raised the issue of corrupt manipulation of LIBOR four years ago, in May 2008, in an article in the Debtonation blogsite. She concluded:

“In other words, these bankers may have been fibbing. And the implication is that the Libor rate should have been much higher. How would we know? The process is not regulated, and therefore not publicly accountable. But the crisis of confidence in this privately fixed process is real. Watch this space.”

We  watched this space for 4 years, but can’t help feeling that the UK’s Financial Services Authority were, er, a little lacking in gumption in choosing to describe Barclays’ behaviour on LIBOR manipulation  (which to us bears a family resemblance to dishonestly obtaining by deception) as “inappropriate” on numerous occasions.  For example,

“It was inappropriate for Barclays to make US dollar LIBOR and EURIBOR submissions which took its Derivatives Traders’ positions (or the positions of traders at other banks) into account.”

See their Final Notice dated 27th June for their findings.

The US Commodities Futures Trading Commission, by contrast, upped the adjectival ante, as well as the financial penalty, for example:

“The CFTC Order also finds that Barclays, acting at the direction of senior management, engaged in other serious unlawful conduct concerning LIBOR.” (author’s emphasis).

Not at all “inappropriate”, we feel.

18 responses

  1. Why on earth are we all paying 3-4 %age points on our mortgages? I was a mortgage broker in the 1980’s and even when interest rates were 12-14% banks were only charging a 1-2% margin.If the base rate is 0.5% none of us should be paying more than 2.5% 0n our mortgages.
    While the more criminal excesses of the banking industry have been well highlighted this is an often overlooked facet of banking practice, which has become fundamentally userous.

  2. A proper enquiry is needed with prosecutions for illegal behaviour. Exemplary sentences should be applied so as “to discourage the others”.

  3. First we had the PPI rip off and now this. It’s high time some of these fraudsters were put in the dock.

  4. From BBC, Fri 29 June:
    Sir Mervyn King claims a ‘Leveson-style’ enquiry into banking ethics is unneccessary as: “We don’t need any inquiry to know what we should be doing. There must be many people who work in banking today who know that they are honest, hard-working and feel they have been let down by some of their colleagues and indeed their leaders.”

    He went on: “What I hope is that everyone – everyone – now understands that something went very wrong with the UK banking industry and we need to put it right.”

    Read ‘banking’ – see ‘the press’ – it’s easy to imagine this having been spun from media mouths before Leveson was launched…

  5. I wish to register my support for a full public inquiry into the conduct of banks in England and the UK.

  6. Time to shift the power from currupt men/women in suits who look and sound like they are doing their best for you but are looking after their greedy selves. FSA weak. Politicians feeble.

  7. Steve, thanks, but calling for a public inquiry is not an alternative to prosecutions, but rather a means of maintaining political pressure for real action. The FSA has been as soft as it could be in the circumstances, and the government has not reacted… so we need to keep things moving and involving people.

  8. The Government including Sir Gideon, BOE as well as shareholders and Board of Barclays have obviously known about market manipulation for a while. Why no action from anyone. Why no investigation, prosecution or at a minimum the Board taking responsibility and sacking the senior management responsible. Presumably this includes CEO and CFO.

    1. Well said, Neil. What good is an enquiry? The proverbial man on the street goes to prison for fraud. Why not this lot?

  9. Well done, Ann. Somebody needs to alert ordinary folk to the excesses of the UK banking system, and you do an excellent job in that!

  10. We had best choose the rule of law because the alternative is much worse. The authorities should find the criminals and prosecute them under the law or We the People will find them and deal with them using more creative means.

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