Monday, 2 July 2012

Ignore LIEBOR Tricks And Cheap Politics

Ignore confidence tricks.
As the LIEBOR scandal claims a few scalps, let's not be distracted. As Bobby "Dazzler" Diamond himself has said, the time for remorse is over, and similar characters will no doubt take their place. 

Let's not be distracted by faux outrage from the House of Commons, which has been so meek in its challenge to the banks' self-serving culture that it suddenly chose to deplore last Thursday. After all, allegations of LIEBOR fixing go back many years and all the major UK political parties have declined to regulate it ever since. As the passage of the Financial Services Bill has demonstrated, the Commons will need to be dragged kicking and screaming to pass anything approaching adequate financial regulation.

And let's not be distracted by the crocodile tears and the speculative law suits from major corporations who claim to have unwittingly based their financial transactions on LIEBOR without understanding that it was open to manipulation. They're big enough to look after themselves - and usually do. Remember that they've failed to act on excessive equity underwriting fees charged by investment banks because they can always pass these fees on to retail investors and consumers, and the Office of Fair Trading seemed to have no problem with this. 

So while we should enjoy the revelations of age old scandals, the ritual sacrifice of Chairmen and Chief Executives and the occasional corporate bloodbath, let's not be distracted by them. Because they are not the driver of appropriate reform in a society that regards the accumulation of wealth of such high importance.

Let's focus instead on continuing to reward facilitators - those organisations that exist to solve their customers' problems, rather than to solve their own problems at their customers' expense. It is this trend in our day-to-day behaviour, more than any other, that will reform our society - and maybe even the behaviour of bank executives.

Image from Sulekha.

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