Saturday, 30 June 2012

The Unacceptable Face Of Banking

I’m not precisely sure which is the most surprising aspect of “Libor-gate”, that it happened at all or that so much of the Anglocentric press is surprised that it is Barclay’s being found with their fingers in the till – in a metaphorical sense of course.

Of course, it helps that Bob Diamond, the CEO of Barclays and the head of Barclays Capital when they were massaging the Libor Interest rates, has his cheerleaders in the press among the pack of business supporters.  Those supporters reported with glee his comments a couple of years ago about it being time we all moved from bashing bankers.  Yet a quick examination of Barclays own recent past will show that Barclay’s have got away with quite a bit thanks to the favourable press they have received.

There seems to be a consensus that because Barclay’s did not seek a bail out from the Government that they had a good Credit crunch.  Maybe they did, but things could have turned out very differently.  Remember that they had taken loans from the bank of last resort –when credit was seizing up – at the same time as Northern Rock.  However should Barclay’s many supporters write off the Credit crunch as something they survived with something to spare, they should remember  the name of the company they tried to buy which then went on to sink another institution.

ABN Amro.

One of the reason’s that Fred Goodwin was so driven to buying this Dutch bank for RBS – to the total exclusion of everything else – was that Barclays were heading up their own bid for the company with their own plans.  Had Barclay’s bought ABN Amro in 2007, it could have been them that would have been bailed out by the Government.  Sure both Salmond and McConnell would have upset, but people would have realised how much of a bullet would have been dodged.  On the downside, we might never have known how unsuited to being a company CEO Fred Goodwin was.  Yet RBS won the right to buy ABN Amro because Barclay’s pulled out.  Nobody knows why.

There are two theories about this.  Either they got wind of how exposed to American sub prime mortgages ABN Amro were and were spooked off as a result.  Or they were not really interested in buying ABN Amro, or were interested but only after the price reached a certain point, and were only interested in damaging a rival in the banking sector.  This is of course speculation, but whether any of this is true or not Barclays certainly missed a bullet when they did not buy ABN Amro.

The FSA’sinvestigation and fine for Barclay’s seems to have turned the clock back to 2008 with many people’s anger towards bankers being reignited once again.  I do wonder what do people expect with a political class that do not see “white collar crime” as being as serious as other criminal acts.  Say what you like about the Americans, but had this happened across there, Diamond would already have done the “perp walk”.  The aforementioned Goodwin is not facing criminal charges, alongside messers McKillop, Hornby, Crosby, Stevenson or Matheson for their crimes.  It seems as if Diamond has only added his name to the list of infamy.

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