This week’s news that Barclays Bank spent several years trying to manipulate the London Interbank Offered Rate, or Libor – the average borrowing rate for banks, calculated each day and used to price innumerable financial services worldwide – has been greeted with widespread disgust.
Yesterday, George Osborne described it as “a shocking indictment of culture at banks like Barclays in run up to the financial crisis“, while Ed Miliband called for criminal prosecutions. Barclays’ embattled CEO, Bob Diamond, has faced fresh calls for his resignation.
Today bought fresh news of Barclays’ malpractice, with the FSA instructing them and three other high street banks (Lloyds, RBS and HSBC) to pay redress to a large number of small business customers that were missold interest rate swaps.
Meanwhile, the latest voice to join the chorus of outrage over the banking sector’s behaviour is none other than that of Mervyn King, Governor of the Bank of England.
Earlier today, at a press conference to mark the launch of the Bank of England’s Financial Stability Report, King refused to endorse Diamond as a fit and proper person to run a bank. “There’s something very wrong with the UK banking industry“, he said, “and we need to put it right.”
“It is time to do something about the banking system…Many people in the banking industry are hard-working and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks – the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today news of yet another mis-selling scandal.”
• Osborne, Barclays, the Cayman Islands and tax avoidance 17 April 2012
• The warnings about Barclays’s tax-dodging greed were there in 2008 28 February 2012
The logical conclusion to all of this is that we need a Leveson inquiry for the banking sector. Yet King denies that such a thing is necessary, as does David Cameron.
How many more revelations and scandals will it take for that position to become untenable?