Tuesday, 30 October 2012

Platitudes and Placation

Financial Times Chief Economics Commentator, Martin Wolf once said, “The conclusion to be drawn from [the Bank of England’s executive director for Financial Stability Andy] Haldane's work is that an out-of-control financial sector is eating out the modern market economy from inside, just as the larva of the spider wasp eats out the host in which it has been laid” and with mounting evidence to support claims that the FSA have neither the stomach nor the inclination to prosecute banking criminality, the best that victims of the UK’s banking crisis can expect from reform is a ring side seat for an endless round of regulatory wrist slapping.

Placated with promises of integrity and more customer focused business models, the FSA have allowed the individuals within the banking fraternity (whose greed cost hundreds of thousands of UK residents their livelihoods along with their homes) to escape the consequences of their actions with little more than,

·       and a marginally demeaning ban from working in the city

While retaining,

      ·        several very desirable residences,

      ·        a substantial asset based net worth
      ·        and very sizeable pensions

Despite amassing a great deal of this wealth by indulging in all sorts of elaborate chicanery-including the widespread abuse of structured investment vehicles, conduits, derivatives, securitizations and collateralized debt obligations, boost leverage, gaming the regulatory system and avoiding tax, the Peter Cummings(HBOS) and the Fred Goodwins (RBS) of this world are left to lick their meaningless wounds aggrieved at being singled out for FSA tokenism. In contrast, the victims of this banking plague of financial spider wasps are expected to suffer the blanket approach to asset stripping which followed the near collapse of our financial system and plunged the UK into four long years of economic crisis.

During this time,

       ·        UK home repossessions have averaged nearly 3000 a month
       ·        UK unemployment has risen to 2.53 million
       ·        And austerity led government cut backs in both the NHS and Benefits department continue to be hugely detrimental to the nations most vulnerable.

Yet with UK regulatory eyes seemingly fixed firmly on how best to help those who perpetrated a global financial crisis retain both their wealth, and in some cases their power without either party losing face, I fear there is little hope for those of us seeking sanctuary from the relentless pursuit of lenders who are intent on socializing their losses from the property crash they created.  It is, nevertheless, mildly encouraging to find limply legislated lip service has not been the only method by which some of the fraudulence of global banksters have been addressed.

In this month alone,

        ·        Former Anglo Irish Bank chairman and two of his senior executives are to be tried in a criminal court over banking irregularities which have cost the State 29 billion

.       ·        The United States Government has filed a fraud lawsuit against Bank of America Corporation alleging the bank cost taxpayers more than one billion in losses when they sold defective home loans to government backed mortgage companies Fannie Mae and Freddie Mac.
        ·        US home owners launched a class action against banks who repossessed their homes following the calculated use of Libor manipulation to inflate mortgage repayments and affect default.

Scottish astronomer, academic and computer scientist William Samson once said, “A writer lives in a state of astonishment. Beneath any feeling he has of the good or evil of the world lies a deeper one of wonder at it all. To transmit that feeling, he writes” and while I do not deny I am regularly in a state of astonishment over the behavior of the UK's financial regulators, I cannot help but wonder how, despite widespread evidence of banking fraud and continued public outrage, banksters are slipping affluently off the hook into retirement, with the vast majority of their spoils in tact, to enjoy a life of elitist comfort completely Scot-free.

It is certainly not a future their victims can anticipate and this is reason, I write.


  1. Another great post Caroline. With the efforts of people like you, Ian Fraser, Rowan and others there is some hope that the eventually the majority view will be to 'get the bastards' rather than to sweep 'all this nonsense under the carpet'. (I post on Facebook as Ashley Smith.)

  2. Wonderful observations, Caroline, and so well expressed, once again.

    Despite UK media trumpeting the regulatory crackdown it is clearly not going to do the job to the degree required for rectification. Too many with vested interests in charge of the job.
    In Australia we're edging in that direction, but it is still token effort. The political will does not exist, with a few notable exceptions, including Nationals Senator John Williams, who was behind the 2012 Senate Inquiry into post GFC Banking. We're still waiting for the Report to be released. Other reports have asked for a clean up of the Receivership and Liquidation industry and nothing changed. This time we will be policing the implementation of the report's findings.
    Observing the situation around the world, I can only come to the conclusion that either those at the top of the tree lacked the insight and skills to foresee the consequences or were too busy and took their eyes off the ball. So much govt and regulatory action is reactionary, too little too late, and lacks preventative orientation. The well informed and quiet alarms were sounding for many years; the louder ones were dismissed and denigrated for their efforts.
    Clearly there is a real need for non-aligned advisors and truth tellers in preference to self-interested soothsayers. The adversorial nature of politics and law prevents our elected representatives from admitting and dealing with the truth. Party politics distort democracy, which is so much more than the right to vote. Those governments who resist real change will wear the consequences at the ballot box and in the streets.

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