The banking report, with all its well-meaning and serious-sounding gobbets of wisdom, reminded me I had something recorded from a couple of months back. So the other night I finally got round to watching the BBC documentary on bankers.
Very portentous, the BBC, when it comes to bankers. Bankers: Fixing the System, the first episode was called. Lots of talking heads and even more shots of buildings from angles so bizarre I felt like I’d been strapped to the roof of a black cab, face up, and driven at speed through the streets of London. And as for the bloke with his pavement sketch of the City in chalk, the less said about that the better.
But stylistics aside, the programme-makers did, I thought, do a pretty decent job of explaining LIBOR and how it was fixed and, more importantly, how shocking it was that this should have happened. More shocking, in the view of some, than the far more economically significant events of the crash of 2008-9 (-13/20/pick-a-number). If you’ve read my other posts on LIBOR (here and here), you’ll know I agree.
The usual suspects were wheeled out for ritual vilification and humiliation: RBS, the FSA, the Bank of England. Politicians seemed to get off relatively lightly, with Andrew Tyrie (chair of the Treasury Select Committee) showing a maturity, intelligence, balance and sense of fairness that made me wonder if he really is a politician at all. John Mann, on the other hand, seems to think the sole purpose of the Committee is for him to grandstand and ask idiotic and irrelevant questions about the Quakers. If I had to choose between him and the pavement artist for an important job, I know who’d get my vote.
But I digress. The point is, the guy who got hit hardest was Bob Diamond. Which is fair enough, not because he necessarily deserved it (the programme included statements from a number of people who thought he didn’t), but because it reflected the media and political frenzy of the time, twelve or so months ago, when he fell.
It was interesting, that fall. Lord Turner of the FSA, and Andrew Bailey of the Bank of England, both appeared on the programme and both used it as an opportunity to gloat. To boast, almost. It reminded me of that night in 1997 when the young, unknown Stephen Twigg couldn’t restrain himself from the cry: “I’m the man who beat Portillo”. But Twigg was young and it had just happened and, frankly, it had been a bit of a surprise. These were veterans of financial regulation who’d had nearly a year to reflect on their actions and seemed to be reduced to rubbing their hands together and competing for the credit of who’d really removed Diamond.
The problem with the regulators’ boasts was that the BBC had already done a pretty decent job in presenting the viewer with a timeline and the basic facts. And the basic facts were that the City regulators had been warned about LIBOR-fixing, by their American counterparts, and had chosen to do nothing about it, for far too long. There were systemic issues, major systemic issues, and one of the biggest was regulatory failure. So what do the regulators do? They try to blame the “culture” at Barclays.
And don’t get me wrong: it’s pretty clear there was a problem with the culture at Barclays. And maybe that culture was something to do with Bob Diamond. But if Diamond was behind it all, this whole “cultural” mess, then how come the problem was so much bigger at RBS and (in particular) at UBS, where the scale of the conspiracy dwarfed the goings-on at Barclays, but where no senior management have been “moved on”? How the hell did Bob imbue RBS and UBS – not to mention the dozen or so more who are yet to settle with the regulators – how did Bob imbue all these other institutions with his mythical “culture”? Something airborne, maybe, something in the vents, or the water supply, powders in the mail? The viewer could only guess, for neither Turner nor Bailey expounded further.
Instead, they used the opportunity to remind us all that they’d found a scapegoat. They’d found someone to pin the tail on and now they were falling over each other to get the credit for it. In everything they said it became clearer and clearer: they had been, and they remained, more concerned with their own PR than with the actual problem.
Unseemly, unprofessional and ineffective. That was the financial regulatory system as embodied by these men. Now the regulatory rulebook is getting torn up and rewritten, you can pretty much guarantee there will be mistakes and miscalculations and holes big enough for a whole gang of Bob Diamonds to crawl through. But at least they’re trying. The regulators wouldn’t look beyond the personal to try to fix a systemic problem, so I think it’s fair enough that someone tries to fix the systemic problems at the regulators.
There’s always been a tendency, in the political world, to look for quick fixes, individuals, short-term solutions. It makes sense. If you’re courting public opinion, and you’ve stumbled across or presided over a godawful mess, there’s a beautiful, seductive logic to pretending not only that you’ve solved the whole problem, but that it was someone else’s fault in the first place. Even when a politician admits that a problem is systemic, nine times out of ten their solution will be narrow in focus and personal in blame.
We expect this of our politicians. They have a 4-5 year lifespan and the gaze of the public constantly on them. But our regulators should be different. Their attitudes should be long-term and professional, not short-term and political. When they lapse into the political, we get a problem. A problem with a “culture”. Not at Barclays, or RBS, or even UBS. But in the regulatory body itself.
If you liked this, take a look at some extracts from my soon-to-be-published novel Without Due Care here.