Yesterday it was announced that Lloyds Bank was being fined £218m for fiddling interest rates in order to manipulate the market for its own benefit*. The particularly shocking thing about this incident – the latest in a long line of corrupt practices by the banks – is that the offence happened after the crash of 2008, and involved abuse of the very fund the government had set-up to help the banks survive. (The government was providing emergency cash for when banks were in difficulties, and by fiddling interest rates Lloyds was able to reduce the fees it paid to use this cash). This effectively meant Lloyds was stealing money from the government.
Mark Carney, the governor of the Bank of England called the offence ‘reprehensible’, and in reply Lord Blackwell, chairman of Lloyds, described it as ‘truly shocking conduct’ (though whether he was referring to the fact they fiddled interest rates, or just the fact they were careless enough to get caught doing it, is of course open to debate). All were agreed that it amounted to criminal conduct for which individuals ‘could’ face prosecution (don’t hold your breath).
This scandal of course follows other scandals involving Barclays* (fiddling interest rates; fiddling the price of precious metals; ‘dark pool’ manipulation); Royal Bank of Scotland* (fiddling interest rates); HSBC* (money laundering, fiddling the price of precious metals); and Standard Chartered* (sanctions violations). There is also an ongoing investigation into the fiddling of foreign exchange rates involving, not surprisingly, Barclays and the Royal Bank of Scotland*.
After all the events of the last few years, it’s quite clear that Free Market Capitalism is a completely broken system, whose only purpose is to enrich the clever and the unscrupulous at everyone else’s expense. Banking is at the rotten heart of this corrupt system, and rather than providing a service to the rest of society, it has become an enormous leech whose only function is to accrue as much wealth for itself as it can. Greed and selfishness rule, leading to corrupt and frequently criminal activity, which the criminals then either cover up, or if they can’t do that they try to pass the buck in endless circles, so that no one individual is ever held accountable or responsible. It is now obvious to any decent person that if the private finance sector is to continue at all, it should only be under tight regulation, with severe penalties for those who step out of line. Unfortunately there are still people around who believe in ‘light touch’ regulation, and more importantly the banking sector does its damnedest – through lobbying and the financing of political parties – to fight any changes that might diminish its vast wealth and power (the Tory Party gets over half its funding from the City of London). Which is why we must fight the system as hard as we can from the outside, because it will never reform itself from within.
* Refs: Lloyds: http://www.bbc.co.uk/news/business-28528349 Barclays: http://www.bbc.co.uk/news/business-27536127 and http://www.bbc.co.uk/news/business-18671255 and http://www.theguardian.com/business/2014/jun/26/barclays-shares-tumble-dark-pool-attorney-general Royal Bank of Scotland: http://www.bbc.co.uk/news/business-21348719 HSBC: http://www.bbc.co.uk/news/business-20673466 and http://www.reuters.com/article/2015/02/24/us-usa-banks-probe-idUSKBN0LS07P20150224 Standard Chartered: http://www.bbc.co.uk/news/business-20669650 Foreign Exchange: http://www.bbc.co.uk/news/business-26526905