The story on the front page of every British news website and likely tomorrow morning’s papers, is the allegations against bankers at Barclays that they fraudulently manipulated the interbank lending rate to cushion the blow of the financial crisis and, in some cases, make positive returns.
Today’s news will be discussed ad infinitum by every political commentator alive in this country. The top stories on the Guardian (http://www.guardian.co.uk/business/2012/jun/28/barclays-boss-bob-diamond-pressure-mounts), the BBC (http://www.bbc.co.uk/news/business-18622264), the Indy (http://www.independent.co.uk/news/business/news/barclays-boss-bob-diamond-under-intense-pressure-to-quit-7896220.html) and the Times (I’m not a subscriber) describe a whirlwind of bitter frenzy, not seen since the immediate aftermath of the 2007/2008 financial crisis.
The criticism has been knee-jerk and scathing. David Cameron said: “People have to take responsibility for the actions and show how they’re going to be accountable for those actions. It’s very important that goes all the way to the top of the organisation.” Opposition leader, Ed Miliband called for a criminal investigation: “When ordinary people break the law, they face charges, prosecution and punishment. We need to know who knew what, when, and criminal prosecutions should follow against those who broke the law. The same should happen here.”
Such bitter, populist criticism will continue in the same vein for the next few days, before the story drifts quietly off the front pages as the real work in the solving this embarrassing mess begins. But, the inevitable onslaught of banker bashing will fill the airwaves, the inky paper and TV screens for a while still. The calls to send the chiefs at Barclays – and potentially HSBC, RBS, Citigroup and UBS if the FSA investigation finds more evidence of wrongdoing – to prison or at least to expel them from their posts will be everywhere. As a kind of overflow pipe for the bursting sewers brim full anger, I want to suggest a little perspective to calm the situation.
The BBC article says that “investigators say that Barclays’ traders lied to make the bank look more secure during the financial crisis and, sometimes – working with traders at other banks – to make a profit.” This sounds to me awfully like any businessman trying his utmost to make a profit. In a brutal industry where success is heavily remunerated but slight failure is treated as an eject-able offence, are these men not merely acting on fear? If you were in such a situation, would you not do the same?
This anger feels like another reaction to the financial crisis in general. The crisis was proof of the frailties of an economy heavily focused on private and public sector debt, over-reliance on the financial services sector and, even though it is hard to face, the greed of twentieth-century Western humanity.
Certainly, these traders were irresponsible and should not be absolved of all blame. The tentacles of financial services reach into every crevasse of our economy and therefore those within it should exercise great care. Yet, banking and its ilk are all about making money out of other people’s money, by whatever means possible. It’s all about greed and having more. If this is so immoral, then why would we let our over-reliance on such an economy develop? In fact, when people were taking out mortgages and loans (often multiple times) to fund lifestyles to match even bigger houses in the property boom, is this not the same greed exemplified by fraudulent financiers?
What the bankers did was without question immoral, but it was merely a symptom of society’s institutional malaise, not the root cause. Before we send them all to jail, we should take some time to reflect on the greed and mass consumerism of society in general.