Leaders: Tough regulation needed now to deal with banks
IN JANUARY of last year, the chief executive of Barclays Bank, Bob Diamond, told MPs that the time for remorse and apologies from the major financial institutions which had been at the heart of the great crash of 2008 was over.
In the light of the record fine handed out to his bank for manipulation of the inter-bank lending rate, Mr Diamond’s message that they had to move on, to get on with rebuilding and making profits again, appears at best naive and at worst rank hypocrisy.
For we now know that traders at Barclays were putting pressure on their colleagues who play a key part in setting the daily Libor rate – the London Inter-Bank Offered Rate – to do so in a way which would benefit their bank in terms of the money made on complex financial transactions but could disadvantage most of the rest of us whose mortgages or business loans are dependent on this, up to now, semi-secret and mysterious self-regulating system.
That such activities were allowed in before and after the calamitous events of the banking implosion, which brought the world’s financial system close to collapse, beggars belief. Calls for Mr Diamond to resign, while they may be justified, do not begin to address fully the issues which Barclays’ behaviour – as it seems that of many other banks, too – throws up in terms of the regulation of the whole system of banking.
Consider the charges which can be laid against the banks and bankers. They came close to bringing about the end of capitalism, something decades of Marxist agitation had failed to do. While the banks boomed and then plummeted, they went on to mis-sell many ordinary people payment protection insurance and they also encouraged small firms to take on complicated interest rate swap deals which cost businesses dearly and which the Financial Services Authority is likely to condemn in a report out today.
Yet despite all of this evidence, the banking industry has maintained it had turned a corner, that the days of Gordon Gekko-style “greed is good” speeches by over-paid champagne-swilling City traders were over for ever, with the spiv culture replaced by a responsible form of capitalism which took its responsibilities to society seriously. Such statements were always suspect, but have been exposed as duplicitous platitudes by the Barclays scandal and e-mails from traders promising to buy each other bottles of Bollinger if they fixed interest rates to their advantage.
We cannot go on like this. First, if there is evidence of fraud, there should be prosecutions. Second, the UK government must finally leave behind the laisser faire tolerance of the City which it, and its Labour predecessor, presided over. Banks no longer deserve the benefit of the doubt. They need tough, even intrusive regulation to make sure this kind of behaviour, which has had such a damaging effect on ordinary people, cannot be repeated ever again.
Challenge to university system flawed
Education secretary Michael Russell was yesterday accused by Labour of a presiding over a “power grab” to exert “unprecedented levels” of ministerial control over our higher and further education system. The Tories also weighed in, claiming the minister was trying to bully universities into bending to his will.
Although a robust political fighter, even Mr Russell might have been a little taken aback by the tone of opposition criticism of his plans to overhaul radically the governance of Scotland’s colleges and universities.
If he was, he should not have been. For his proposals are highly controversial, and the opposition parties were seeking to exploit serious concerns over his plans in further and higher education. However, what matters is not opposition point-scoring but whether the changes make sense.
Mr Russell’s plans to bring together colleges in regional groups led, in some cases, by experienced politicians who are not Nationalists, make a great deal of sense. There are too many colleges, delivering too little to too many young people, who desperately need proper skills and training.
But the education secretary’s objective of forcing universities to elect chairs of governing bodies, to curb principals’ pay and to make them take more poorer students lack substance, as he could not specifically say which of these ideas he would press ahead with.
There may be merit in them – particularly on access to education for the poorest young people – but were he to continue, Mr Russell would be indeed grabbing power and taking it from institutions which fiercely defend their independence from government. As a Nationalist, Mr Russell must surely favour independence?
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Weather for Edinburgh
Saturday 25 May 2013
Temperature: 5 C to 17 C
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Temperature: 8 C to 17 C
Wind Speed: 14 mph
Wind direction: West