/ Money

Prosecute bankers when banks break the law

Barclays’ chairman Marcus Agius has resigned, admitting the rate-fixing scandal has unveiled ‘unacceptable standards of behaviour’. But it’s too little too late, and doesn’t fix the corruption at the heart of the system.

It’s all too easy for bankers to admit guilt when someone’s been caught, particularly when they’ve already pocketed millions in salary and bonuses over the years. What we really need is for those found responsible to be hauled before the courts.

And most of you agree: in our survey, almost eight in ten of you said that where banks have broken the law, individuals should be personally prosecuted.

But how can we fix the broken banking system? The Financial Services Authority doesn’t exactly inspire confidence, with only one in five of you saying that it’s effective in regulating UK banks.

Restoring consumer confidence

Consumers also have low confidence in the government to handle the banking crisis effectively. Two thirds say the government will not act in their best interests when implementing banking reform.

As a first step, the banking sector should be referred to the Competition Commission immediately. More competition is essential to force a change in the culture of British banking.

Secondly, let’s claw back bonuses. The manipulation of Libor, the rate at which banks lend to each other, will have led to a direct increase in Barclays’ profits and share price, and therefore to an increase in executive pay. It’s not enough for people at the top to apologise, or even resign. The scale of the problem is such that those found responsible should be brought to book and their bonuses repaid.

How the scandal impacts you

The recent systems failure at NatWest and RBS inconvenienced millions of people, but reeked of incompetence rather than intent. Barclays’ intentional manipulation of Libor has had a less tangible impact on consumers, but it’s a fair bet that millions of us will have lost out indirectly.

Rest assured, we’re trying to find out if retail banking customers lost any money because of Libor rigging, and if so, how and when they will get compensation.

So, how do you think those responsible should be held to account for their actions?

Comments

I don’t know why we have to discuss this…..corrupt activities have been perpetrated & had we non-banking people done similar things we’d be put in jail. It boils down to politicians protecting their utterly dodgy chums & probably stock & shares as well.

Bill Smith says:
6 July 2012

I agree wholeheartedly, it is high time that heads rolled for this sort of behaviour. All too often the perpetrators get off scot-free or with a gentle wigging. It’s time big business was brought to book for deliberate manipulations of this nature. It’s always the shareholders and account holders that lose out when this sort of thing happens, never the bosses who allowed it to happen in the first place. So Bob Diamond and his cronies have resigned but it shouldn’t stop there, what about all the so called ‘performance bonusses’ they have pocketed over the years that this has been going on? They should be paid back, with interest, after all they have had the benefit of interest wherever they have stashed it. OK, rant over.

frances says:
2 July 2012

The problem is, who would sit in judgement ?
Who is independent ?
Who would put morality above making a fast buck,
or fiddling the expenses ?

“Screw thy neighbour” seems to be the order of the day.

FINSBURYPARKER says:
2 July 2012

‘Laws are spider webs through which the big flies pass and the little ones get caught’.

Honore de Balzac

I never hear anything about ‘Conscience’ these days…..it always was a faculty, intuition or judgment or an aptitudef the intellect that distinguishes right from wrong but it seems to be lost to the modern world.
Oh…the good old days….

Jenny says:
2 July 2012

When and in which country were these good old days?!

FINSBURYPARKER says:
2 July 2012

‘Oh…the good old days’….
___________________________________

‘When and in which country were these good old days’?!

As much as it galls me, I have to agree with Jenny,…..If Jenny reads this,….Jenny,…You’ll never know what this cost me! Yuk, yuk, yuk!

Regards!

frances says:
2 July 2012

One wit some time ago described ‘Conscience’
“as that sneaky feeling somebody may be watching”.

In giving his public relations apology, the chief executive of Barclays said the malpractices revealed were inconsistent with the culture and values of the bank. I beg to disagree. They were entirely consistent with the culture of greed, misrepresentation, corruption, corporate cupidity, and dedicated defalcation that characterises modern banking at every level. The bonus system is possibly at the root of it; a deduction for adverse media coverage might tip the scales in favour of probity and honorable conduct. A week in Afghanistan sitting on an open doorstep polishing our soldiers’ shoes might also concentrate the mind.

I believe all the major banks are equally to blame. The rot probably set in at Big Bang in 1986 when the old fashioned banking system and separation of Stock Jobbers and Stockbrokers ended. Unfortunately the cult of celebrity and conspicuous consumption has added to this.
The bonus issue is ill conceived. Why should a salesman ( and it was always the sales guys) get a bonus for selling a company’s products when the rest of the workforce also contributed e.g accounts, personnel, cleaners etc. for without the individual elements the whole would not exist and the salesmen would not have the hotels to stay in and the cars with which to visit clients or air fares to go further afield. Ultimately the shareholders who own the company would also like some consideration with a reasonable dividend that has not been diluted by the extravagence of the salesmen.
The immense sums of money given in bonuses in the finance area in particular is obscene. The average worker will be fortunate to earn just one million pounds in their lifetime. So those receiving £5M, £10M and £20M A YEAR are on another planet. But it is also bad in ordinary businesses where workers are rewarded with a bonus for On Target Earnings. People should be paid a good basic salary and then receive a profit share at all levels if the company has done well and after shareholders have been awarded a fair dividend.
There must be Which members who have been or are involved in this type of remuneration. What do they think?
Regards,
Brian.

FINSBURYPARKER says:
2 July 2012

As far as ‘Bonuses’ are concerned, that’s the concern of the ‘Shareholders’, provided its a ‘Privately owned Bank!

As long as these ‘Private’ Banks pay out nice large juicy Dividends, the shareholders are hardly likely to bite the hand that feeds them, are they?

A similar situation occurs within the realms of the Union Barons, as long as their member get a nice slice of the action, their members really don’t care if their Top brass get huge Salaries, and live in mansions!

A different kettle of fish exists regarding those Banks where the public has a large investment via their Taxes!

That in turn has its own problems, turn the screws to hard on them, and the people that are capable of turning it around to get in the black again will move to pastures green.

The term ‘Northern Rock & Hard Place’ applies here?

So, I guess a corruption of that old adage, ‘Oh what a tangled web we weave when Banks first practice to deceive’ is apt for the situation we find ourselves in.

How to put things to rights?…..Ahhh,…..There lies ye rub!

‘Give me control of a nations money supply, and I care not who makes it’s laws’!

Amschel Rothchilds

Yup!….That sounds about right!

Jenny says:
2 July 2012

Yes, I agree Brian.
Especially as the banks are NOT doing well, no-one should get bonuses – if its not dependant upon success then its just another way of saying ‘pay packet’. It is unfair that only the salesmen get the benefit too.
The sums of money are just amazing.
As several banks are largely owned by the government now, any profit should be coming back to the taxpayer and if theres no profit, then definitely no-one should get a bonus.
If they have broken the law, then they should be prosecuted personally – easy. I don’t trust this government to supervise this though, or to supervise the banks which they largely own.

FINSBURYPARKER says:
2 July 2012

‘If they have broken the law, then they should be prosecuted personally – easy. I don’t trust this government to supervise this though, or to supervise the banks which they largely own’.
______________________________

Governments do not ‘Own Banks, they have invested Tax Payers monies, ergo, we, Joe Public own them.

Government Supervise Banks??,,,,,Surely you jest!

Jenny says:
2 July 2012

Fair enough, but it is the the government’s duty to regulate the banks and manage it’s country’s sharehold like any other investor in order to make a profit for the country/advance some of the country’s other priorities.
It’s true – they aren’t doing it at the moment!

FINSBURYPARKER says:
2 July 2012

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs”.

Thomas Jefferson, (Attributed)

Just substitute ‘American People’ for British ‘Subjects’.

3rd president of US (1743 – 1826)

Jenny says:
3 July 2012

I do believe that a government sometimes has to borrow money though.

frances says:
2 July 2012

“When a government is dependent upon Bankers for money,
they and not the leaders of the government control the situation,
since the hand that gives is above the hand that takes ………….
Money has no motherland. Financiers are without patriotism and without decency.
Their sole object is gain.”

Napoleon Bonaparte, 1815.

FINSBURYPARKER says:
2 July 2012

‘Give me control of a nations money supply, and I care not who makes it’s laws’!

Amschel Rothchilds

Jenny says:
3 July 2012

Yes – the Rothschild and Bonaparte families didn’t get on too well during the Napoleonic wars, though they both understood banking well 😉

Yes they did, it reminds me of who controls the Bank of England…..

It begins with R 😉

Macnonymous says:
3 July 2012

Let’s see now, they apparently have defrauded consumers and small businesses for years. Now they are to be fined, but who will actually pick up the bill? Not the bankers, nor the politicians/regulators that allowed it to happen but us, the consumers and small businesses that are customers of those banks.

Can anyone actually see bankers being taken to court, being found guilty and having their assets confiscated? No, I thought not.

TerryinDorset says:
3 July 2012

Well, if I’m here to provide quotes that’s it….I’m off.

Jenny says:
3 July 2012

No quotes needed!

FINSBURYPARKER says:
3 July 2012

‘Well, if I’m here to provide quotes that’s it….I’m off’!
_______________________

Don’t be daft Terry, your thoughts are just as relevant as anyone else’s on this forum!

Just remember,… ‘Seek only for fact and thought, and crowding in come words unsought’!

Ooooooops!!

Regards.

Hello Terry, if we ever feature your comments in Conversations or in the magazines you will be credited. We like to think your comments count for something here at Which?. Thanks.

FINSBURYPARKER says:
3 July 2012

I see from the ‘Meedja’ they propose a ‘Quick’ Inquiry, well,…we all know what that means.

Mind you, our manufacturing industry need a bit of a fillip, the Paint industry will benefit from the huge sales of ‘Whitewash’!

A full length ‘Public Inquiry is what’s required, at least we will get to see ‘Some’ of the shenanigans that we the public suspected were going on!

Sadly, I believe its not just bankers or rather the bank industry that could do with an injection of morals/ethics and fair play. The same could and should be levied at the supermarkets. Its seems that in the UK at any rate capitalism has been replaced with greed and dirty tactics.

Banning the CEOs and other board members from ever holding a similar position regardless of industry would also be a small deterrent. Limiting their pay to a multiple of the lowest earner and that should take into account the pay of the poorest paid in some outsourcing centre in the Far East as well.

I thought the swish-swish I can hear is the sound of the wind in the trees but I realise it’s not….it’s all whitewash being stirred for immanent use…..

Mr Blobby says:
3 July 2012

Banks employ some very smart people and when they are given the task of “make me some money, no questions asked and you will be seriously rewarded” then it is unsurprising that they will come up with some very ingenious ways of making money. Given the limited amount of personal liability that they face it is again unsurprising that the schemes they come up with are often of dubious legality.
Banking reform should be based on three basic areas:
Recovery of bonuses.
The current system of bonuses is ludicrous. If a scam is perpetrated (as in this case), because of the complexity of the schemes used these days it takes several years to unravel. By then the traders who perpetrated the scam have collected their bonuses and moved on. The bank takes the fine and reports a lower profit in the current year and this years bonus is reduced thus penalising the current traders who may have had nothing to do with the scam. Clearly this is grossly unfair and so if a set of trades is found out to be illegal, then the traders involved in that team should be required to hand over all their bonuses to the authorities (not the bank) without having to admit any individual culpability unless specific individuals can be identified who did perpetrate the scam. This should encourage teams to make sure that all members are behaving themselves.
Executive culpability
At present, it is too easy for all layers of management to wriggle off the hook by claiming that they knew nothing about what was going on. To be fair, in the case of Bob Diamond, he probably didn’t know what was happening. However this is largely due to the senior managements habit of sticking their fingers in their ears and shouting “la la la I’m not listening” when the operating practices are explained to them. Where illegality has occurred, the directors of the banks need to be made personally liable. This is similar to the ethos behind the Sarbanes-Oxley act in the US; effectively, regardless of what you do or don’t know, if you are a CFO and your firm is convicted of financial malpractice then you go to prison. Something similar is needed here. If the CEO does not put in place adequate controls to prevent malpractice then they share the penalty – personally.
Assumption of market manipulation
Although I have no evidence to back this up I think it is reasonable to assume that a very large amount of trades are conducted for the purposes of market manipulation. This is already illegal but is very hard and expensive to prove and so traders will always push the boundaries to just reach the point where the FSA (or its replacement) will start investigating. This could be changed by starting with the assumption that all trades are performed for the purpose of manipulation (such as LIBOR speculation) unless a legitimate reason for the trade can be documented. So for instance if a company merger is announced, it would be quite reasonable to suppose that trading in the companies involved would increase as the readers speculate on the benefits of the merger. This is healthy and expected. However when a random selling of large amount of stock occurs it is most likely to be an attempt, often by a computer program to create a short term dip or spike in the share price which can be used to make profits. This is not healthy for the market as it alters the market value of a company when its underlying capability has not altered at all. Including such a measure is likely to create a huge increase in market tips and “business news” which could be rigged by the banks to justify their fraudulent trades and so this needs tight regulation as well.
Although this last measure flies in the face of English laws assumption of innocence until proven guilty, I think that there is reasonable grounds to assume that in the case of Bankers at least that they are all guilty unless they can prove otherwise.

Thanks Mr Blobby….I rest my case M’ Lud……

FINSBURYPARKER says:
3 July 2012

‘Hello Terry, if we ever feature your comments in Conversations or in the magazines you will be credited. We like to think your comments count for something here at Which’?. Thanks.
_____________________________

There you go Terry,…What did I say?…..Read the above,…

And you can put that in the bank!…Er,…Um,….Er, well,…..or maybe not a Bank?

Regards

Roland says:
3 July 2012

If staff have broken the law they should be prosecuted.
If customers have been unfairly treated then they should be compensated.
But please can this be done without spending millions of pounds on mountains of paper with reports leading to no action

FINSBURYPARKER says:
3 July 2012

To rectify to the satisfaction of all parties of the Banking Conundrum requires the wisdom of Solomon!

The truth is, we have allowed the fiscal Banking System to to interweave within every corner of the fabric of our Globe & our very existence.

Its like a fungus with Mycelium that spreads underground in the forest.

It works away unseen, until you get a Mushroom/Fungus appear above ground miles away from the original infected site.

The Mushroom/Fungus is a physical manifestation of what has been going on undetected until the corruption can no longer be hidden.

By then, its too late, the whole forest is infected (The body Politic/Banking/Law).

To try to remove it at this late stage with a knee jerk reaction as proposed will destroy more than just the banking System, and those that run the banking System are well aware of this fact. It is their strength, and our weakness.

The whole forest will be destroyed, as the forest now lives in symbiosis with the fungus.

We need persons with an objective viewpoint to remove the Mycelium that is keeping the various Mushrooms of corruption in place.

To remove the infection, ensure that corollary systems cannot feed a new growth of this Fungus is what is required.

Reflecting on what I have written above, where do you find these altruistic persons (Fiscal Botanists/David Bellamy’s?) I have outlined above?…They cannot be our Political masters, Bankers or Law makers….So where do we get them?

I for one would not know where to look

Banks must be forced to accept that, if they want to deal with individual consumers, they must accept a higher standard of performance. This should separate organisations wishing to provide a service from those interested only in profit.

Spot fines for bankers working for consumer financial instutions not following consumer friendy guidelines. Red cards for those persistently commiting breaches

trickydealing says:
3 July 2012

There are reports that suggest that the impact on consumers is minimal, to the extent that where libor rates were set lower than they should have been, a consumer would have benefitted from the ‘fixing’ in that they paid less on borrowings at given times.

I beg to differ on the basis that it is not did the rate go up or down to affect a borrowers borrowings or savings – what is crucial here is that it is EVIDENCED that the rates HAVE/WERE been/being fixed/manipulated for the banks personal benefit. FULLSTOP!.

All other connutations become irrelevant at that point. They admitted manipulating the libor, they have confessed their liability. They must pay!!

Consumers have a consumer right to draw and infer that the bank has charged them a rate of interest that is suspect, is under investigation, and is admitted as such – against any lender that is or has charged them based on LIBOR.

If I am wrong on this, then let the Lawyers of the land tell me where?

I have just been looking at a letter I received from the Halifax dated March 2012 informing me of the increase in my Mortgage rates.

It goes on to explain, “If you are wondering why the Halifax lender variable rates are increasing when the Bank of England rate hasn’t gone up”….. Well I was wondering.

“The reason why we are changing the interest rate now is as…………..and the increased cost of borrowing money.”……Well I still didn’t understand why my mortgage rate had to go up but now I do. Thanks a lot Barclays.

FINSBURYPARKER says:
3 July 2012

Drop a fiscal pebble, even in a fiscal ‘Cesspit’,,…There will be ripples that spread!

Similar to the ‘Butterfly’ effect!??