Mood changing rapidly towards a full Glass-Steagal separation of retail and investment banking
The German regulatory equivalent of the FSA, BaFIN, on Friday announced an investigation into Libor/Euribor fraud. Reuters I think had the story first after Der Spiegel, which noted ‘Two Deutsche Bank employees have been suspended after it used external auditors to examine whether staff were involved in manipulating interbank lending rates.’
Yesterday, I posted at length about the blindingly obvious connotations of the FSA’s basis for accusing Barclays – viz, that it was more concerted, international and longstanding than either the MSM or the Tory Party care to admit. This has now been recognised by Brussels, which is mullig new criminal laws a proposal to cover ‘the manipulation of market indices across the EU and a fundamental review of the rules on how Libor is set.’
Michel Barnier, the EU commissioner overseeing financial services, will amend reforms to EU market abuse rules so that potential “loopholes” are closed and criminal sanctions to specifically cover lying about Libor and Euribor. Yesterday, Barnier called mendacious reportig of such benchmark rates a “betrayal” with potentially “systemic consequences”.
And in the US, Barney Frank told the FT that banks “monkeying” with Libor for their own benefit was “outrageous”.
“It’s this unlimited liability that made merchant — or investment — bankers more circumspect in the past because they put their balls on the block,” he said. “But most of today’s financial problems are because the investment bankers, using the balance sheets of the retail banks, don’t share in the pain. They don’t lose anything — and their culture has infected retail banking. They should never have been together and now they should be split, completely.”
Hallelujah for sound experience, honesty, and common sense. But who was it who repealed Glass-Steagal completely? Step forward Dick Nixon, the most disgraced President in American history.
Vince Cable continues to be vilified for his entirely sensible (and as time has proved, 100% accurate) comments about Rupert Murdoch and investment banking, purely because he is a Big Stateist LibDem with a Labour Party background. It is childish stuff, but nothing blinkers an intelligent person more efficiently than adversarial playground politics. I started with a high regard for Dan Hannan, but it is falling with every polemically illogical tweet he makes….and this Irritable Quotation Syndrome he seems to have contracted is reaching risible proportions.
The Slog 