Well surprise, surprise. Even when setting the interest rate benchmarks that underpin global trade and finance, UK banks acted out of naked self-interest. The emails confirm a culture that was already evident from so many other fines dished out in the past few years, as the FSA has hastily sought to redeem itself and the Treasury for allowing the culture to develop in the first place. A culture where it's routine to forget the compliance department, forget the customer, forget the taxpayer, just solve the bank's problems at everyone else's expense.
The interest rate swaps scandal is yet another 'new' case in point.
This is why any number of bank bailouts will ultimately fail. The banking model is not built to solve customers' problems. Banks are not facilitators.
We need to develop new models to take over as the banking model declines further. Otherwise we'll have no efficient means of moving money from those who have it to people and businesses who need it.
But let's not just blame the banks. Where is the Treasury in all this? Why was Barclays the first to be outed over the latest saga and not RBS, which is 82% state-owned? Was Lloyds involved? The Treasury seems rather passive and unable to appreciate the calamitous state of the financial system or - ironically - how to 'fix' it. It was also revealed in the Times this morning that the Treasury Minister, Mark Hoban, has previously resisted calls to regulate the London Interbank Offered Rate (Libor) - or Liebor, as it should be known - that is at the heart of the latest scandal. Coincidentally, he has also resisted calls to introduce proportionate regulation to encourage the growth of alternative financial models.
Fortunately, the House of Lords is taking a different view. It seems Parliament is going to have to be a lot more vigilant over our financial affairs in future.
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