WE might be angry at the market-rigging in bank interest rates but we should not be surprised. Where any group of people or companies is in a position to fix things in their own interests, they will do so.
The only solution lies in more competition. This Government and the last have both tried regulation, but the riggers are always one step ahead. Then the regulators themselves are not above suspicion either.
Before 1997 the Bank of England kept a tight but grandfatherly control on the banks. It had done this for over 200 years.
Its powers were given to the Financial Services Authority who looked wanting and naked in the aftermath of Northern Rock’s collapse and even feeble in the face of the latest scandal. Now we hear that even the venerable Bank of England itself is not above a whiff of sleaze.
What is wrong is that banks use the deposits of hard-working families and small businesses to speculate for themselves. In any other sphere this would be called embezzlement.
But we have a small group within the banks who can rig interest rates in any direction they choose. In turn, because they are pivotal to what happens, they can then be pretty sure on betting huge stakes on the direction of interest-rate changes.
It cannot be that the chief executives of the banks didn’t know what was going on. Remember Nick Leeson, who brought Barings Bank to disaster? After that ‘back-office’ processes in all banks were made watertight through supervision from the highest level. Any top-banker who didn’t know what was going on must have been down a hole somewhere.
Now we have Ed Miliband calling for an enquiry led by a judge. I disagree. Many judges have been appointed in the Blair-Brown era as much for their politics as their wisdom.
Moreover, they have been appointed not for the traditional 20 years but for 30. We are to be burdened with a left-leaning judiciary for a very long time. They are not equipped by experience or intellect for trying to trump bankers.
Nothing less than a return to core values of propriety, integrity and fair-dealing in banking and business will do. Break up each bank so that none of them have both a retail (high street) side as well as an investment arm. Return monetary control to the Bank of England and use simple competition to root out self-interest.
Prospective police and crime commissioner candidate (UK Independence Party)