Boris Johnson argues against bank regulation, misses the point

The PM’s spokesman thinks Barclays understands public concerns, while Boris Johnson says the Libor scandal is funny. Could the Tories please get back in touch?

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Giving evidence to the Treasury select committee this morning, the outgoing chairman of Barclays Bank, Marcus Agius, revealed that the governor of the Bank of England forced Bob Diamond’s resignation.

Boris-Johnson-Barclays-bikeJust over a week ago, Left Foot Forward reported Mervyn King’s anger at the degeneracy of Britain’s banking sector.

The Guardian reports:

Agius revealed how he and Sir Michael Rake, the most senior non-executive on the Barclays board, had been summoned to see King last Monday – on the day Agius’s departure was announced.

“We had a conversation in which he said that Bob Diamond no longer enjoyed the support of his regulators,” said Agius, who then had to summon a telephone board meeting of non-executive directors to decide how to proceed.

Agius also used his appearance in Parliament to announce that Diamond would voluntarily forgo his £20 payoff, formerly contained in his severance package:

“Despite having no personal culpability, he recognises more than anyone the negative attention that they have generated and has taken characteristically strong action to address that.

These circumstances do not detract in any way from the tremendous legacy that Bob has left at Barclays, and his actions are clear indications of his commitment to the institution to which he has contributed so much.”

Diamond will retain his salary and benefits in excess of £2 million, the prime minister’s spokesman responding thus:

“I think the decision to forgo the bonus is a sign that [Barclays] understand public concerns and that they understand that there is a need for a change in the culture of banks.”

The government’s complacency on this issue – first denying the need for a public inquiry, then claiming that Barclays “understand public concerns” – has been staggering. Yet if there was any remaining doubt how utterly out of touch the Tories are, it was put to rest yesterday – not by any member of the government, but by Boris Johnson in his Telegraph column.


See also:

Will the SFO investigation fail due to government budget cuts? 6 Jul 2012

Inside the world of the bankers…This is why we need a full inquiry 4 Jul 2012

After the Barclays Libor scandal, how long must we wait for a public inquiry? 29 Jun 2012

Miliband: Time for prosecutions, proper regulation and an end to the “casino culture” 28 Jun 2012

The warnings about Barclays’s tax-dodging greed were there in 2008 28 Feb 2012


The feelings of despair provoked by the article kick in almost immediately as your eyes fall upon the headline: “Stop bashing the bankers – we have no future without them”.

The article isn’t immediately odious, merely baffling:

“[London’s technology industry] is positively Californian in its youth, energy, brightly coloured bean bags and breakout romper rooms with very good coffee. They are coming up with apps that help you unleash your artistic urges; apps for establishing the sexual preferences of everyone in the vicinity; apps for helping blind people cross the road.”

Shortly thereafter, Boris changes course, jokingly proposing that someone write a smartphone app called “Fixme, the way of fixing Libor with no incriminating emails“. It’s all downhill from there.

His point, ostensibly, is that “we are now seeing such an amazing collision of technology – search engines, voice analysis, geo-location, face and word recognition – that the possibilities seem boundless.” Any day now, someone will come up with the next Facebook – and then, “they will need someone else to back it.”

He continues:

“Yes, by all means arrest anyone who has been involved in a criminal conspiracy to fix Libor. Bang ’em up. Slam ’em away. But we need the political establishment in this country to stop slagging off a sector that is utterly crucial to the British economy and the current system of global capitalism…

We need to maintain or lengthen London’s lead as the best place to raise and allocate that capital, and we won’t succeed in that objective if we keep on bullying, berating and generally beating up anyone who has anything to do with a bank.”

No one argues that the British economy can survive without investment banks. Likewise, no one is concerned with anything other than weeding out criminality in the banking sector, and seeing justice done. In reducing the events of the past weeks, months and indeed years to an outmoded Tory cliche – to be competitive, one must deregulate incessantly – Johnson fails to recognise the magnitude of the Barclays Libor scandal.

One of the world’s biggest banks conspiring over the course of several years to rig one of the world’s benchmark interest rates is no laughing matter.

Johnson can argue against banking regulation all he likes: the damage that closer scrutiny would do to British banks is nothing compared to the consequences of a cursory, whitewash investigation. Transparency is now key to public confidence in the sector.

The situation our banks now find themselves in is a direct result of their deregulation under Thatcher in the 1980s. A little humility – a quality the Tories so often demand of Labour these days – would not go amiss.


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