Thomas Mathew writes from London: With the banking sector once again embroiled in a scandal – this time it’s the rigging of the Libor rate of interest – it’s probably a good idea to recall the days when the rot was just starting in the financial industry. It came, so that you know, when banks moved into selling mortgages.
Yep, it was a big move, I can tell you that. Few people know this, but more profits have been made on providing mortgages than on any other type of financial operation and it’s the little people who get screwed most of the time – like it always happens when the money men get their way. (By the way, the word ‘mortgage’ originates from the French word ‘mort’ meaning ‘death’. And you can make your own conclusions from it.)
Back in the old days, when marriage was still mistakenly seen as a union between a man and a woman, mortgages used to be the speciality of the building societies that were run on sound principles. Until, that is, the banks began to move in, with many building societies going on the defensive and turning themselves into banks, eventually adding to the woes of the hard-pressed people with mortgages.
But there was more to come. Prior to Tony Blair’s New Labour government weaselling its way into power in 1997, the Bank of England was a wholly owned subsidiary of the Treasury and its main function was to regulate the entire banking system – a job it did extremely well. Yet, no sooner had Mr ‘Five Times A Night’ Blair and his partner in crime, Gordon Brown got into government, thanks to that idiot John Major and with a lot of help from the evil empire, the BBC, they announced that they were granting the BoE independence. At the time dimwits with fancy comb-overs, who called themselves academics and economists, applauded Brown for his bravery and vision, claiming that the independent BoE would perform even better than before.
In fact, nothing could have been further from the truth. What New Labour did was to remove the Bank’s regulatory powers, setting up a toothless watchdog, the Financial Services Authority (FSA), and at the end of the first two years launched their totally destructive policies that effectively bankrupted Britain, both morally and fiscally.
Still, I think the biggest irony of it all is that a political party, Labour, which is supposedly representing the interests of the working people had actually rushed to save failing banks and bankrupted the country while bailing them out. It’s not even Orwellian, it’s some sort of horror sci-fi novel that portrays an invasion of Britain by aliens, New Labour, who are determined to destroy it while pretending that they are making it better. And in the end the evil leader of the alien invasion, Blair, turns out to be a pathetic money grubbing creature from outer space, who leaves office and earns a fortune on dodgy lectures and consultancies, in return for his treachery, while actually having nothing to say of any substance to anyone. (Read his memoirs and you will know what I ‘m talking about.)
And now we have the Libor fixing scandal out in the open and the weird thing is that Labour are on the offensive, demanding that a full-blown public inquiry takes place and investigates how is it that banks were actually fiddling the rates and making a fortune out of it. Even though all this was happening on Labour’s watch and practically under the supervision of the Bank of England. (There’s no way anyone would believe that the BoE knew nothing about it.)
Another hilarious development concerns politicians and bankers saying that the most important thing now is for the banking sector to recover the trust of the people. That is really funny. What trust would that be, I would like to know? Since when did anyone trust the banks? Is it some sort of a sick joke or what?
Anyway, all eyes yesterday had been transfixed on Bob Diamond, former CEO of Barclays, who testified before the Treasury Select Committee, revealing pretty much nothing. He said he found out about the swindle only days before it became public knowledge – oh sure, you did, Bob, sure you did – and that he felt physically sick when he heard about it. Basically he refused to accept any responsibility and praised Barclays for being a great bank.
So, will there be serious consequences for the money men? I doubt it, especially if you consider that they got away with all the previous scandals. Too many important people are involved and they would not want to be implicated. So don’t expect to see anything dramatic. It’s all going to be rather discreet. And not before long it will be business as usual.