Comment: Ignorance no excuse for lack of action over Libor
ONE former banker probably feeling a little smug just now is Fred Goodwin.
Yes, the former Royal Bank of Scotland chief is culpable for a lot of bad stuff and there may yet be more to come, but even his sternest critics must now accept that it took many hands to create the banking crisis.
The growing rate-rigging scandal has already toppled the top brass at Barclays and has now engulfed the governor of the Bank of England Sir Mervyn King following the latest revelations from the US.
New evidence has emerged that, in 2008, King supported proposals from Timothy Geithner, then president of the Federal Reserve Bank of New York, to reform Libor, the rate at which banks lend to each other.
King promised to pass on the suggestions from Geithner, now US Treasury secretary, but the buck seems to have been passed on to the British Bankers’ Association (BBA), which oversees Libor and with whom the Fed held discussions about its concerns that same year.
There is no evidence that either the Bank of England or the BBA acted wrongly or encouraged any fiddling of the rate by any of the dozen or so banks now under investigation. The BBA’s outgoing chief executive Angela Knight says the Fed’s views were incorporated into changes.
But these latest revelations, and other claims emerging that the fixing of Libor may go back as far as 1998, raise further questions about whether the response from the banking authorities was sufficiently robust. On the evidence so far, there is still plenty of explaining to do.
King and his deputy Paul Tucker are due to face MPs on the Treasury Select Committee this week, supposedly on the financial stability report. But attention is bound to switch to the Libor scandal.
Tucker, a potential successor to King, last week told the same committee he had not known until recently that Barclays had been submitting artificially low Libor quotes in 2008. That may excuse him of any blame, but being unaware of a major weakness in the market doesn’t sound like a convincing argument as to why he should take on the top job when King bows out.
Sun will shine again for M&S
It was a bad week for Marks & Spencer and a worrying one for chief executive Marc Bolland, who rather lamely blamed the weather for poor trading figures. When it rains, M&S shoppers seem to stay at home; while it doesn’t appear to affect those visiting John Lewis or Primark, which filed improved results.
Clearly, there are winners and losers, but the high street is undoubtedly a tough place to be right now, and Bolland knows there are fundamental issues to resolve at M&S that have nothing to do with the climate. Everyone from fashion experts to its stubbornly loyal shoppers were telling him where they think it has lost focus.
A common call last week was for M&S to stop trying to be all things to all men, but this is not a time to be throwing the baby out with the bath water. Furthermore, shoppers will always want something new, and that means some ideas will work while others will fail. Innovation should never be sidelined.
M&S shares are down 12 per cent since Bolland took over in May 2010, which tells us that investors are a little tense about its direction. But the CEO has hired new blood to lead its revival, the balance sheet is healthy and despite the decline in performance it remains a highly profitable business. There is no crisis, yet.
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Weather for Edinburgh
Friday 24 May 2013
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