News reaches us today that Barclays chairman Marcus Agius has resigned following his involvement in the Libor lending rate scandal. Welcome news? Certainly. Something that will restore confidence in British banking? Not likely.
Since 2008 the public narrative around the banking crisis has barely left the headlines. Each day more filth is discovered, more authority abused and more trust destroyed. Manipulating the impression of risk for lending across London is yet another in a string of high-profile cases damaging the reputation of bankers everywhere.
Agius leaving will satiate the baying crowd for a time, and rightly so. Like a villain in a pantomime, we all want to see those that cause injustice getting their just deserts. And that goes for Bob Diamond as well it seems. A poll currently open on The Guardian site asks whether ‘Bob Diamond should resign after Barclays admits manipulating interest rates’ to which over 93% of respondents have voted ‘Yes – the top man should carry the can.’
A recent Which? poll found that four in five of us want bankers prosecuted over law-breaking with just one in five thinking that the Financial Services Authority (FSA) effectively regulates the banks.
When the Treasury effectively puts Diamond on trial later this week all cameras will be turned to the interrogators. Will they be too lenient? Will they ask the right questions? Where is the noose? Pundits are betting that Diamond wont be losing his job anytime soon, so is this merely a symbolic demonstration that Parliament is acting in line with the wishes of the populace? With two-thirds of people believing that the measures taken by the government to reform the banking sector are not in the public’s interest that may not be such a bad idea.
In truth the Government is reforming the regulatory system from top to bottom with a bill currently going through Parliament that abolishes the FSA and creates a tough new Financial Conduct Authority. Its job will be to focus specifically on market abuse and protecting consumers – if that’s not Parliament acting in the public interest then I don’t know what is.
Bob Diamond and the whole Barclays management team have very serious questions to answer so it’s right that the Treasury Select Committee is dragging him in to account for his actions. But we shouldn’t downplay the symbolism at work here. Fred Goodwin losing a knighthood, Agius leaving Barclays and Diamond on trial are symbolic acts attempting to stop the poison of doubt infecting the confidence in the markets and that of the British public in the banking sector.
That’s no bad thing, but it’s not what’ll bring banking reform to Britain. Parliament will do that in time, and the sooner we realise that the better.