It’s been a bad week for the banks. In the past few days we have heard of two new scandals in the industry. First, leaked e-mails have revealed that staff at Barclays bank (and others, pending investigation) have been fixing the ‘Libor rate’; they have manipulated lending rates to massage their own losses and gains. Second, the FSA has found that Britain’s banks have been unfairly selling complicated products to small businesses whilst they were supposed to be protecting these same small businesses from volatile interest rates. The details don’t really matter. What does matter is that we see more and more headlines in newspapers reporting the scourge of the City, immorality of the rich and greed of the bankers. It won’t be long now before the Oxford English Dictionary recommends replacing the ‘b’ in banker with a ‘w’ to make sure that everyone around you knows just quite how much you hate the lot of them. Because, remember, if we had worked hard enough and were clever enough to succeed in a such a ruthless but well-rewarded profession then we would, without a doubt, march to Canary Wharf and tell our own Chief Executive in no uncertain terms exactly what we thought of him and his morally bankrupt corporation. Of course we wouldn’t. In the same way that, probably, if any one of us were a successful and high-earning comedian who had the opportunity to avoid paying tens of thousands of pounds of tax, perfectly legally, we would. I take absolutely no hesitation in saying that these people, be they bankers or comedians, have been greedy and immoral. But please let us not be so naïve and sanctimonious as to say that most people would not have done the same if the circumstances allowed.
As I type, I hear that the President of Barclays bank has resigned; due at the Treasury Select Committee tomorrow to face questions over the fixing of the Libor rate and undoubtedly over the general state of the banking sector. Bob Diamond, surely, will take a kicking from the MPs on the committee and quite rightly. He is responsible for his employees and they, possibly illegally, have been screwing over everyone else with the sole intention of swelling their bonus. But the problem is that the our economic system encourages this, and always will. Capitalism has turned everybody into a consumer and we all rely on the system and the banks. If the banks do well, regardless of how they do it, the economy does well; there are more jobs, fewer people go bankrupt and people can afford to start buying that posh, French jam with the red-and-white checked lid.
When times are good and everybody is having posh jam on their brioche, nobody cares two hoots about how the banks are making their money. But now that times are really bad, and more people have to eat supermarket own-brand jelly on their polystyrene bread, it is suddenly quite important to what extent the bankers are pulling the cashmere over our eyes. Though they really did not want to, the government have announced an inquiry into the conduct of the banks in the run-up to and during the financial crisis. Ed Miliband has done well to pressure the government into doing so by making a damning critique of the industry and leaving the Tories on the back foot, forcing their move. Miliband indulged in some crowd-friendly posturing to give the impression of being greatly outraged and surprised, even Ed Balls had the nerve to jump on the bandwagon. Cameron didn’t want an inquiry because though in truth he knows how awful the banks are, he cannot bring himself to burn his bridges with the City and a lot of his friends. Just as I doubt we’ll be hearing much more about how sickening he finds tax evasion to prevent the publication of a picture of Dave leaving duty-free with a trolley piled high with fags and a massive Toblerone. In this instance it was convenient for Ed Miliband not to have any bridges left to burn but as he and Cameron both understand full-well; we need the banks and greedy bankers. As satisfying as it would be to regulate the hell out of the banking industry, it wouldn’t help anyone.