How many enquiries into banks do we need?

Today I will be voting against an eighteen months Judge led enquiry into banks.

We have had a wide ranging enquiry into the industry, its structure and attitudes led by an eminent independent economist and former competition regulator, Sir John Vickers.

We are having a full scale FSA enquiry into wrong doing at various banks.

There are potential Serious Fraud office enquiries into established wrongdoing following FSA investigation.

The banks need fixing now, not in two years time.

The government should know by now what needs doing. It is poised to legislate. A Judge led enquiry would cause delay in fixing the problems.

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100 Comments

  1. backofanenvelope
    Posted July 5, 2012 at 10:46 am | Permalink

    We should break the problem down into bits. Lets start with RBS. Nationalise it, break it up into bits and have a fire sale. We (taxpayers) would take a big hit, but only one, as we would make it plain that any further problems would lead to closure with no taxpayer money involved.

  2. Lord Blagger
    Posted July 5, 2012 at 10:51 am | Permalink

    How about an inquiry into how much debt you’ve run up? That’s way more serious because of the consequences.

    ie. You’ve run up so much debt that you can’t afford to pay it. That means you aren’t going to pay out on the contracts you’ve entered into.

    Imagine the outcry if Barclays had ripped everyone off to the tune of 20 grand.

    However, if MPs do it, they cover it up.

    At the same time, we need an inquiry into why MPs exempted themselves from money laundering laws, and investigations by the tax man.

    What are you up to that you need that sort of protection?

    • Brian Tomkinson
      Posted July 5, 2012 at 5:33 pm | Permalink

      Lord Blagger,
      I agree. Everything that was once held in high esteem seems to have sunk to an abysmal level. Government needs to set a far better example but where are the leaders with integrity, honesty and ability? I cannot identify any.

  3. zorro
    Posted July 5, 2012 at 11:00 am | Permalink

    Agreed, it’s just more long grass kicking – we don’t want to make a decision yet argument. Anyone might think that we were in a benign position with successful banking facilities. I admire your patience……they need to act like yesterday….

    Zorro

  4. REPay
    Posted July 5, 2012 at 11:06 am | Permalink

    Thank you for voting against this bonfire of money. I would however like someone to come up with a convincing narrative as to the role of the UK government and the regulators (regulatory system) in the current sovereign debt crisis. I fear that until the electorate gets to understand who was to blame for what we will be stuck in the “it was the greedy bankers” mode. Without some real understanding there will be no change of behavior by voters who still believe in other people paying more tax (the rich/non-doms, the old etc.) and profligate politicians who buy votes and feather bed our enormous and unproductive public sector.

    • Bob
      Posted July 5, 2012 at 1:12 pm | Permalink

      @REPay
      The tax system has created a circle whereby the executives that run our pension funds and ISA share accounts hold the majority of votes.

      So at the AGM, A and B using your votes, approve C’s remuneration, B&C do likewise for A, and A&C likewise for B.
      Everybody’s happy, you don’t even realise that your pocket has been picked. The politicians go over to the Royal Exchange for a nice black tie dinner, and say nice things about the City, and lo and behold the donations to the Lib/Lab/Con parties continue to roll in.

      Unless and until we as a nation stop behaving like sheep, we will continue to be treated like sheep.

      Google the “British Constitution Group”

      • lifelogic
        Posted July 5, 2012 at 4:22 pm | Permalink

        Indeed detaching investors from their investment is not usually a good idea. The free book “monkey with a pin” shows the extent of the financial “services” industry and charging systems rather well.

        The best solution is usually to keep funds under control of the owners.The fiscal system is always encouraging separation by silly tax breaks. It should be neutral but no doubt there is lobbying going on and that is usually what seems to win. Rarely the interests of voters and tax payers.

        • Bob
          Posted July 5, 2012 at 8:56 pm | Permalink

          @lifelogic

          Ordinary people don’t really understand how these ponzi schemes work.
          They believe the glossy advertising bumf, and the tax relief clinches the deal.

          Why should the government need to encourage us into them with tax incentives? If I want to save for a personal pension, why should the government tell me how I can invest the money? It’s my money and it’s my business how invest it. Maybe I don’t like the stock market. Maybe I prefer precious metals, currency options, art or property.

          Abolish CGT for individuals, and let them make their own pension arrangements, without having a bunch of spivvy bankers, parasitic fund managers and/or insurance salesmen living high on the hog by helping themselves to great globs of service charges, commissions and entry/exit fees.

          And if I decide to buy shares, at least I can turn up at the AGM and let them know what I think of their remuneratory aspirations. I am the shareholder, it’s my business, not theirs, they are just hired hands.

          If any of you lost money on endowment policies, you may not like to know that the salesmen who sold them to you made a very good living from the premiums you paid, and they don’t care if you had to work beyond retirement to fund your “shortfall”, otherwise known as your contibution to their Italian villa.

          • alan jutson
            Posted July 6, 2012 at 10:15 am | Permalink

            Bob

            Much to agree with here.

            Charges are the hidden downfall in making such investments, they suck the life out of any profit and/or increase losses.

          • lifelogic
            Posted July 6, 2012 at 7:55 pm | Permalink

            Indeed search “Monkey with a pin” free book or audio book which explain the racket rather well.

  5. forthurst
    Posted July 5, 2012 at 11:20 am | Permalink

    These ad hoc enquiries are getting tiresome. The Iraq enquiry was set up to establish why Blair, with the connivance of Howard, dragged us into an illegal war: neocon sympathisers were duly empanelled. The Press equiry has illicited a lot of tittle tattle, when the main issue is the grotesque consequences of the BBC/Murdoch duopoly.

    We have had the Vickers enquiry, but the main issues are whether our real banks should be run by banksters and whether banksters unlike other criminals should have immunity from prosecution.

    On the first point, it is clear that proper banks are unsafe in the hands of banksters, but proper bankers would not be able to understand or manage banksters, therefore there needs to be a total separation beyond Vickers of the two activities. On the latter point, we have seen the ongoing consequences of banksters’ criminality in trashing the world economy so they should certainly not be immune from prosecution, but under the English legal system built over a thousand years, issues of guilt are decided by juries, not by judges, as in the EU.

    • uanime5
      Posted July 5, 2012 at 6:41 pm | Permalink

      Actually the vast majority of criminal cases are decided by 3 magistrates, not a jury; almost every civil case is decided by judges; and all civil and criminal appeals are decided by a judges.

      In the UK jurors were chosen by the sheriff, who also prepared the case and enforced the judge’s decision. This lasted until 1730 when juries were chosen randomly to ensure they were impartial, rather than under the influence of the sheriff.

      Finally Germany is the only country in the EU that doesn’t use a jury system.

      • forthurst
        Posted July 5, 2012 at 8:52 pm | Permalink

        If you want to nitpick, why not get your facts right?

        Most civil cases are decided by negotiation between opposing lawyers; judges are used where the essence is in the interpretation of law, however juries may still used where the matter concerns guilt or innocence of a civil offence.

        The comment concerned the criminal law under which anyone accused of other than a summary offence has the right to trial by jury. Appeal courts determine whether a trial had been fair or whether new evidence renders the verdict unsafe; they can’t overturn verdicts because they don’t like them.

        With regard to the continent, Germany does not have trial by jury and France permits lay people together with judges to try cases attracting ten years or more, so no trial by a jury of peers even in the most serious cases. Austria presumably doesn’t have trial by jury otherwise people would not be being weighed off for so frequently for thoughtcrime.

        • uanime5
          Posted July 6, 2012 at 8:18 pm | Permalink

          It’s not a civil case if the courts aren’t involved. Also if the lawyers want to negotiate they don’t need a judge to interpret the law. Civil cases only occur when two parties can’t reach an agreement.

          The purpose of a civil case is to establish the facts and determine how the law applied in this case. Judges often throw out cases where the facts haven’t been established and lawyers want answers to hypothetical cases.

          Juries are only used for certain types of civil offences (torts). Civil cases involving negligence (only gross negligence is a crime), nuisance, and copyright infringement are not tried by a jury. Only for defamation is a jury used. Also these cases are to establish is the defendant is liable, not guilty (only criminal cases decide if someone is guilty).

          The purpose of the court of first instance is to establish the facts of the case and apply the law to it. The purpose of appeal courts is to ensure that the law was applied correctly (including the law regarding evidence and court procedure), not to question the facts of the case.

          Judging by you post you seem to believe that criminal and civil courts act the same way; they don’t. In criminal cases the court can dismiss the appeal (defendant is still guilty), uphold the appeal (defendant is innocent or their sentence is reduced), or quash the previous trial (defendant is free and a new trial is required to determine whether they’re innocent or guilty). In civil cases the court can find for the claimant or the defendant, and change the damages or remedy.

          Appeal judges can and do overturn cases because they don’t like them. Lord Denning in the Court of Appeal was often criticised by the House of Lords (now the Supreme Court) for overturning verdicts he didn’t like.

          • forthurst
            Posted July 7, 2012 at 5:43 pm | Permalink

            Why contradict with restatements? Rest assured I read this blog for JR’s words of wisdom, not yours.

  6. Ken Seakens
    Posted July 5, 2012 at 11:24 am | Permalink

    Judge-led? Whatever happened to Judicial?

    • APL
      Posted July 6, 2012 at 7:47 am | Permalink

      ken Seakens: “Whatever happened to Judicial?”

      Judicial, arrives at a conclusion based on the evidence.

      Judge led, arrives at a predetermined verdict according to the judge appointed.

  7. lifelogic
    Posted July 5, 2012 at 11:29 am | Permalink

    The banks needed fixing desperately before Cameron even came into office. The government owns much of them anyway – why on earth has it not been done?

    I assume because he prefers bailing out the PIGIS, introducing no retirement laws, gender neutral insurance, increasing taxes, over regulating almost everything that moves (or not) and increasing the size of the parasitic sector almost everywhere.

    Growth and sensible banks are just not something he is remotely concerned with other than with a few vacuous words.

    Gay marriage, female succession to the crown, keeping in the the EU, enforced “equality”, comedians personal tax arrangements, happiness indexes, paternity leave and fake green bling are far more important than jobs and growth to this blatant Europhile, fake green, socialist and his even dimmer John Lewis society side kick Clegg.

    • lifelogic
      Posted July 5, 2012 at 11:31 am | Permalink

      At least it seems Osborne wants to reduce wind grants by 15% but why on earth have any grants at all for this patent nonsense?

      Get Fracking and Nuclear going now!

      • Bazman
        Posted July 5, 2012 at 8:47 pm | Permalink

        Near your house and without subsidies? You are OK with that I take it?

        • lifelogic
          Posted July 6, 2012 at 7:59 pm | Permalink

          Do not worry it will not be near my main house but nuclear is very close to my holiday house. Far better nuclear or fracking than wind at least these do actually work.

      • stred
        Posted July 6, 2012 at 8:07 am | Permalink

        LL. I was told by a friend, who is a senior mechanical engineer, that the foreign firm building the huge offshore wind arrays is currently having to train a large number of staff from scatch to maintain the complicated gearing and transmission equipment that has to withstand severe weather and be serviced by ships the size of ferries. Not ferry cheap and cancelled in high winds.

        • lifelogic
          Posted July 6, 2012 at 8:01 pm | Permalink

          They exist only because of absurd subsidy, they will cease when the subsidies are stopped, as they make no economic sense.

          • Bazman
            Posted July 7, 2012 at 6:22 am | Permalink

            Like nuclear.

    • lifelogic
      Posted July 5, 2012 at 12:36 pm | Permalink

      BBC Radio 4 reports that the BOE is to inject a further £50M into the economy. What and absurd and typically BBC way of reporting what they are doing.

      Why not the BOE has decided to further devalue your money, your pension (unless inflation linked/state sector) and your wages.

      • alan jutson
        Posted July 5, 2012 at 1:00 pm | Permalink

        Lifelogic

        Apart from the fact that the money is not even going to be spent in the economy.

        Perhaps the new man at the head of the BBC will correct all of these errors of fact.

        Then again, perhaps not.

        Expect the licence fee to rise in due course though.

        • lifelogic
          Posted July 5, 2012 at 4:42 pm | Permalink

          Well we can but hope. Perhaps he (as Cameron did) said the right things at the interview biting his lip. Perhaps Patten was conned as MP’s were with Cameron.

          Lord Patten, perhaps, thought he was a good Europhile, fake greenwash, forced equality, ever bigger state, BBC think person who could continue all the propaganda.

          But, just maybe, he is really a red blooded super hero (in disguise) who is sick to death of the appalling, socialist, dumbed down, arty, drivel they pump out and is going to educate, inform, uplift and entertain for a change. We shall see.

          If so he should renounce the BBC’s silly agenda (on the EU, the green exaggeration drivel, and the ever bigger state). Say he will forgo 2/3 of his excessive salary and make all the others at the top do the same. Then stop recruiting Guardian people or lefty arts graduates for 30 years or so until a sensible balance is restored to the organisation.

          • Bob
            Posted July 5, 2012 at 9:09 pm | Permalink

            @lifelogic

            According to Lord Monckton it was decided at the UN summit in Rio to drop references to climate change because “the people” have rumbled it.

            The former warmists, latterly changists will now be riding a new bandwagon entitled “Sustainable Development”.

            See Order-Order.com
            “A new study published in peer reviewed Nature Magazine, by a German university research team reveals that large swathes of Africa’s savannahs will become forests by the end of the century. Apparently atmospheric shifts and changes to the continent’s climate will see tree cover increase as critical levels of carbon dioxide are reached. Not only will this result in Africa becoming immersed in thousands of acres of beautiful oxygen-replenishing forests, the scientists believe the change will be gradual, meaning that there is no dangerous shock to the earth’s system. Dr Steve Higgins of Goethe University described the findings as “reassuring”.”

          • APL
            Posted July 6, 2012 at 7:54 am | Permalink

            Lifelogic: “We shall see.”

            Sounding a bit like the propaganda wing of the Tory party, Mr Lifelogic.

            Offering ‘hope and change’, where bitter experience tells us we gonna get force fed the same old pre processed pap.

            None of those things you suggested will happen, this man like his predecessor is a BBC man, brought in to maintain the status quo.

          • lifelogic
            Posted July 6, 2012 at 8:03 pm | Permalink

            APL I regret you are probably right but give him a chance.

      • Adam5x5
        Posted July 5, 2012 at 1:38 pm | Permalink

        Think you mean £50Bn…

        What is interesting is all the media report the rates as being “a historic low”. Surely after nearly 30 months it’s becoming the norm, not an anomaly.

        We’re well on our way to having a ‘lost decade’ like Japan. Meanwhile savers and the prudent are punished (again), while people who overextended to buy a house/car they couldn’t afford are protected (again).

        • Adam5x5
          Posted July 5, 2012 at 1:39 pm | Permalink

          that was meant to be a reply to lifelogic

        • RB
          Posted July 5, 2012 at 4:35 pm | Permalink

          Sorry, but I see this comment made time after time and I just don’t think its accurate.

          Base rate 0.5%. Average mortgage APR is over 5%, ten times the base rate and mortgages are only offered with huge “arrangement” fees running into thousands of pounds.

          The banks are ripping us all off, as usual. Savers are patently NOT subsidising borrowers – they are subsidising banks.

          And I am fed up with all these ridiculous allegations that people “overextend” to buy a house. Houses cost what they cost in the place that you live/work/grew up. Why should anyone choose to pay inflated rents (wasted money) when they can, albeit reluctantly, borrow to buy? SHould they all move oop north to protect your paltry interest? Introduce proper social rents like many european countries and fair enough – renting is a sensible option. The suggestion that people are somehow irresponsible for securing somewhere to live is ridiculous. What do you want? Families to live in shanty towns to protect your bloody interest on your savings?

          I save. I am virtuous. How dare those people less fortunate then me try to buy somewhere to live. Baby boomers who have made a fortune out of property, who are the last generation to get final salary pensions, who have done incredibly well, moaning that their sodding pension or ISA or whatever is not performing as well as they would like. ALl whilst sitting in their conservatory reading the paper after returning from a round of golf at the local club, comfortably retired while their kids are expected to drop dead at their desks at 70, with shitty pensions (if any) and no savings, not because they are spendthrifts, but becuase they just don’t have the money.

          Bankers rip us off every time, whenever they can, and as we have seen are prepared to lie, cheat, and commit crime to keep the money rolling in. This ludicrous moralising by those lucky enough to be savers against borrowers is getting very tiresome.

          • Posted July 5, 2012 at 9:22 pm | Permalink

            You are right it is hard to borrow at all and certainly at much below 4%. Most are paying much more. The banks are ripping off depositors and borrowers to replace the money they incompetently wasted.

            Rent is not however “wasted money”. If you buy you pay interest to “rent” the money, if you rent you pay rent – they are equivalent. The rent also covers maintenance and insurance usually. If people want to have houses available to rent they clearly need to pay rents. It is no more wasted money then renting a car, a hotel room or a digger. If you do not want it do not rent it.

          • ChrisXP
            Posted July 5, 2012 at 9:30 pm | Permalink

            Oh dear we are upset. As a baby boomer I am certainly not rich on property, I have no ISAs, nor conservatory, nor can I afford a golf ball, let alone a round. I will get no pension till 66 (if at all), and have already given my son more than half my life-savings so that he could get shot of his student loan. He has no job, like many his age, but I certainly don’t sneer at him; quite the opposite in fact, I am deeply concerned for his future as many others are for their own children.
            To paint a picture of all baby-boomers as selfish, greedy old codgers is childish. I fully expect now to face retirement with far fewer “goodies” and very little money…..but if it helps the young ones get going and become prosperous then, like Gadriel, I shall happily “diminish and go into the West”.

          • stred
            Posted July 6, 2012 at 8:33 am | Permalink

            High rents are a result of high house prices. Savers have invested in buy to rent because of the pension and savings rip off. They have to charge rents to service the capital plus expenses. Returns are currently less than some long term savings rates. If house prices fall, as they have been in real terms, landlords can lose their money.

            The inflated house prices are a result of the over supplyof mortgages during the pre-crash period. Now the banks have been given the huge differential in order to keep them from collapse and, in return, they finance the government deficit by cooperating in the QE fiddle.

            Banks and the Treasury/ BoE are screwing savers and borrowers equally. The only people retired on huge pensions are higher paid public employees, those in the financial industry, law and accountancy and directors of larger companies- all in semi-monopolistic positions.

        • lifelogic
          Posted July 5, 2012 at 4:43 pm | Permalink

          Thanks £50Bn indeed.

        • APL
          Posted July 6, 2012 at 7:58 am | Permalink

          Adam5x5: “We’re well on our way to having a ‘lost decade’ like Japan”

          You’ve got no vision.

          We are on our way to a lost civilisation. The whole of the West is mired in debt, the countries that aren’t are too insignificant to make any difference.

          When Greece, Spain or Italy finally does blow, it’ll take France and probably Germany with it. Followed by the UK, and the USA.

          You’ll be lucky if we get away with ten years, it’s more likely to be a hundred.

      • zorro
        Posted July 5, 2012 at 1:59 pm | Permalink

        It’s really just ludicrous reporting from the BBC – the money is clearly not being ‘injected’ into anywhere but the zombie banks through opaque QE and covering inefficient, wasteful government spending…..

        Zorro

      • Frederick Bloggs
        Posted July 6, 2012 at 5:37 am | Permalink

        £50 bn

    • zorro
      Posted July 5, 2012 at 5:54 pm | Permalink

      Indeed…..but if we didn’t have these state funded, non-productive jobs, think about it…..Who would co-ordinate our diversity?

      zorro

  8. alastair harris
    Posted July 5, 2012 at 11:29 am | Permalink

    So why have an enquiry at all. Surely we can trust the specialist arms of the police to investigate and prosecute accordingly? After all, we pay enough for them. I just hope their enquiries extend to all of the actors in this seedy little play.

    • Bob
      Posted July 5, 2012 at 1:17 pm | Permalink

      @alastair harris

      “Surely we can trust the specialist arms of the police to investigate and prosecute accordingly? “

      They’re too busy arresting people like Roger Hayes and taking him for trial in secret courts before slapping him away in god knows where.

      I pray that nothing untoward happens to him.

      Reply:We need to be told why this was handled in this way. People do, however, have to pay their Council tax for local democracy to continue to function under the rule of law.

      • zorro
        Posted July 5, 2012 at 3:15 pm | Permalink

        I don’t think that he was ‘refusing’ to pay, it was more ‘withholding’ payment in protest at how it was being spent. However, the authorities are covering themselves in glory by the way in which he appears to have been ‘processed’…. Any further news given to his family regarding his whereabouts?

        Zorro

        • zorro
          Posted July 5, 2012 at 3:16 pm | Permalink

          I’m also interested at what has supposed to have happened on the M6 toll road earlier today….

          Zorro

        • lifelogic
          Posted July 5, 2012 at 9:41 pm | Permalink

          Doubtless they will say they have to take every report seriously. Well no they have to make an intelligent judgement. The do not react to many more serious incidents as we have frequently seen even when reported many times.

          Clearly they should act intelligently and proportionately otherwise they just do more harm than good and do the terrorists work for them as is so often the case. It does not bode well for their general level of competence.

          • zorro
            Posted July 6, 2012 at 9:36 pm | Permalink

            Interesting juxtaposition with the police reaction to the unmitigated destruction and looting of large swathes of London and other urban conurbations in August last year…..

            zorro

      • lifelogic
        Posted July 5, 2012 at 4:51 pm | Permalink

        Does local democracy really function? All I see is parking and motoring fines, demands for money and the odd bin man (I have never seen a bin woman yet) and fake “consultancy” exercises. Anyway it could easily function on half the money – start by reducing the state sector pensions to the average private sector level – about one tenth.

        • uanime5
          Posted July 6, 2012 at 8:24 pm | Permalink

          So because of the politics of envy you want a race to the bottom on pensions. Surely if you be better to raise private pensions by forcing companies to provide a pensions to all their employees.

      • lifelogic
        Posted July 5, 2012 at 4:53 pm | Permalink

        Indeed what really happened to Roger Hayes?

      • Bob
        Posted July 5, 2012 at 7:15 pm | Permalink

        Reply to JR.

        I’m guessing that it was handled in this way because he once arrested a judge for treason in his own court.

        He is withholding his tax because of the illegal uses to which the government are putting taxpayers money.

    • Gary
      Posted July 5, 2012 at 2:00 pm | Permalink

      alastair harris

      I agree, get the police in. Let them investigate fraud. Take it wherever it leads them.

      Everything else is seems to be an exercise to avoid the police at all costs.

      We cannot trust the SFO, even Blair overrode them, the FSA is a shambles they sat on this for at least 4 years, the questions to Diamond demonstrate politicians mostly don’t have a clue, and who can trust a judge after Hutton et al ?

  9. Michael Read
    Posted July 5, 2012 at 11:45 am | Permalink

    And another £50bn printing taking the total to £350bn.

    Any ideas on how this arrangement is going to be unwound?

    • norman
      Posted July 5, 2012 at 1:01 pm | Permalink

      £375 isn’t it? But what’s an odd £25bn the way this government goes through money.

      Isn’t it ludicrous we get heated up about pasty tax (no pun intended), fuel duty and the like and the amount of money this government is printing dwarves all of these controversial measures combined.

      Here’s a strategy you can pass on to No.11 – hold the presses back a little then just print £300bn or so to fund massive tax cuts in 2014. What could possibly go wrong?

      Or maybe this is the Osborne master plan!

    • Bob
      Posted July 5, 2012 at 1:26 pm | Permalink

      @Michael Read

      Unwound?

      Who said anything about unwinding?

      - The public sector needs to be paid
      - Welfare benefits need to be paid
      - The EU needs to be paid
      - Foreign aid needs to be paid

      Where do you think the money will come from?

      Have you never of Mugabenomics?

      The solutions to our problems do not lie within the Lib/Lab/Con cartel.

      • A different Simon
        Posted July 5, 2012 at 3:26 pm | Permalink

        When the UK Govt offered Robert Mugabe sanctuary in London and suggest he stand down I thought it was in the interests of Zimbabwe .

        Now it is becoming more and more obvious that they wanted to get him over here as an economic adviser .

        • sm
          Posted July 5, 2012 at 9:47 pm | Permalink

          I thought we were full up!

          What about the minister of finance?

      • stred
        Posted July 6, 2012 at 8:52 am | Permalink

        Bob.

        They are ‘unwinding’ as they go. Banks obey regulation and withdraw finance from private sector, while doing the QE swap with HMG. The amounts are similar, so not excessively infationary overall, while allowing the public sector to keep their jobs an increase expenditure. Which, of course, helps keep up the gross national product.

        A clever fiddle and never notived by the media commentators.

    • zorro
      Posted July 5, 2012 at 1:48 pm | Permalink

      It’s now up to 375bn but what’s 25bn between friends……..More importantly, as I have mentioned on previous occasions, there is no clear strategy of how this will be unwound successfully without unleashing very high inflation. Do I trust the governing authorities to complete this task competently. Looking at their record and the facts, no I do not.

      Zorro

    • Leslie Singleton
      Posted July 5, 2012 at 7:18 pm | Permalink

      Unwinding per se is no problem. QE is B of E buying gilts and unwinding (when economy needs slowing down) is selling them thus taking cash out of economy. There is no question of fivers being thrown out of helicopters as some seem to think.

      • zorro
        Posted July 5, 2012 at 8:47 pm | Permalink

        We shall see….I’m glad that you have confidence that a government in the future, bearing in mind our recent experiences, will have the foresight to know when to stop….I’m not sure that I have the same confidence.

        zorro

      • Mark
        Posted July 5, 2012 at 10:52 pm | Permalink

        If we look at the net issuance of gilts since the credit crunch we have the following:

        2008/9 £125.7bn
        2009/10 £211.0bn
        2010/11 £127.8bn
        2011/12 £130.4bn

        Total £594.9bn
        Less QE £325.0bn

        Real sales £269.9bn, or about £67.5bn p.a.

        That suggests that we can’t even contemplate unwinding any QE until the deficit is lower than £67.5bn, and that the amount that can be unwound will be limited by the size of any ongoing deficit.

        Of course, reality is that the coming financial crises will produce hot money flows. We may initially be a beneficiary as the Euro moves deeper into crisis, but if we fail to get our own house in order, the undertow flows back out will be highly damaging, creating a sterling crisis to make those of the 1970s or ERM ejection pale into insignificance. If we are lucky, we will be able to pass off QE gilts on hot money inward flows.

        That we have managed to make real sales of £67.5bn has already depended on siphoning off hot money flows: the holdings of foreigners have increased. But those who saw the flows of money in the 1970s crises will tell you that money can move out just as easily.

  10. Lord Blagger
    Posted July 5, 2012 at 11:49 am | Permalink

    Meanwhile, no one is buying Gilts in the amounts to fund the deficit. So the governments printing more funny money, to give to banks, and then its forcing them to lend the funny money back to it so it can spend spend spend.

    Another chunk of QE. ie. It’s yet another example of a fraud. The government doesn’t want to be seen to print and spend, so it uses opaque and expensive ways to get around the mess.

    Just like the ECB and its lending via the banks to bail out governments. It’s not allowed to lend directly so it decides it can break the law by using subterfuge.

    • zorro
      Posted July 5, 2012 at 1:51 pm | Permalink

      Agreed, it is an inefficient way of trying to stimulate an economy (not that this was their primary reason for doing it….). They are robbing savers to prop up bankers and the government’s own inefficient spending. I wouldn’t mind so much if they had anything tangible to show for 375bn QE, like improved infrastructure.

      Zorro

      • lifelogic
        Posted July 6, 2012 at 8:13 pm | Permalink

        infrastructure – a new set of pointless traffic lights or an empty coloured tarmac bus/bike lane for example or those silly dotty ramps on the pavements?

        • zorro
          Posted July 7, 2012 at 5:22 pm | Permalink

          Certainly not….!…..How about improved airport access/capacity, and improved roads, better broadband. There are many sensible options which could have created some employment opportunities and allowed for training rather than lining in aroundabout way the pockets of banksters or maintain funding for diversity coordinators!

          zorro

    • fox in sox
      Posted July 5, 2012 at 9:00 pm | Permalink

      Why is it wrong for Barclays to fiddle the Libor rate when governments fiddle their interest payments by QE?

      If only we could all set our own interest rates, wouldn’t life be so much easier.

  11. Alte Fritz
    Posted July 5, 2012 at 12:24 pm | Permalink

    Agreed in every particular. Milliband and Balls are playing games on this.

  12. Adam5x5
    Posted July 5, 2012 at 12:30 pm | Permalink

    We don’t need an enquiry into banks. We need a free market, and the police/CPS to actually do something (though that might be asking too much).

    In a free market, any behaviour like this will be rooted out by the banks themselves as if they were caught, no-one would do business with them as they would be untrustworthy. as it is, they’ll just get bailed out so no risk.

    Let businesses collapse, instead of using taxpayer money to prop them up – in the case of banks, the average consumer already has sufficient protection with deposit protection up to £50K (I think). Anything else is caveat emptor.

    • zorro
      Posted July 5, 2012 at 1:55 pm | Permalink

      Yes, we have deposit insurance for an individual with accounts in a single banking group up to £85,000. As you say, caveat emptor for the rest and 100% liability/no bailouts for investment banks.

      Zorro

    • lifelogic
      Posted July 5, 2012 at 1:58 pm | Permalink

      £85,000 per person per UK Banking Licence

      • Mark
        Posted July 5, 2012 at 10:57 pm | Permalink

        In 1986 it was £48,000. Brown cut it to £35,000 in 2000 as part of the FSMA, IIRC. Indexed from 1986 it ought to be around £120,000 now.

  13. alan jutson
    Posted July 5, 2012 at 12:38 pm | Permalink

    So many enquiries completed, so much money spent, so much time taken, then they all seem to get filed away with only parts of anything acted upon, which leaves very much a dogs dinner of a solution.

    This latest debacle has surprised me a little, in so far as I thought the problem was still reasonably current,when by and large in fact it seemed to occur in 2005-2007.

    I was not aware that Barclays had conducted their own internal investigation by using the worlds formost experts (we are told) at a cost to themselves (their customers) of £100,000,000 to dig into the problems, to report, and recommend a solution, to recommend a correction in proceedures, and that it had all happened.

    We now appear to be in a situation (if reports and suggestions are to be believed) where it is possible that many other Banks could also have been undertaking a similar working practice.

    Thus we would probably need to instigate an investigation into all Banks dealings for the past 10 years, and not just single out one Bank.

    It would appear (if reports are to be believed) that the FSA did not uncover anything untoward until very late in the day.

    Indeed it took them 10 years to find out about the problems with Equitable Life.

    One also has to ask the question about the Bank of Englands responsibilities in all of this.
    How did they react, were they really independent from Government pressure etc.

    I can only conclude that a judge lead enquiry would take far, far longer than a couple of years, by which time almost everyone who was responsible would have either moved on, or died.

    Example: Equitable Lifes problems (it is reported) started in 1991 and some people are still awaiting compensation 21 years later, and no one got prosecuted.

  14. lola
    Posted July 5, 2012 at 12:49 pm | Permalink

    It would be a lot more useful to have a ‘judge led enquiry’ into New Labour and its Chancellors. The performance of the Bank of England since 1997. The Failed FSA and the contribution of the FSMA2000 to the current ferrago.

  15. Max Dunbar
    Posted July 5, 2012 at 1:01 pm | Permalink

    I think we know what the result of a judicial enquiry into banking would achieve……..

    • A different Simon
      Posted July 5, 2012 at 3:34 pm | Permalink

      Or a parliamentary enquiry or a “truth and reconciliation” enquiry .

      They all amount to an expensive pretence which will deliver an outcome which has already been decided – resumption of business as usual .

      • APL
        Posted July 6, 2012 at 8:03 am | Permalink

        A different Simon: “They all amount to an expensive pretence which will deliver an outcome which has already been decided”

        But just imagine, with all these Parliamentary inquiries the magic expenses fountain must be spurting tax payers cash all over Westminster.

  16. Bill
    Posted July 5, 2012 at 2:15 pm | Permalink

    Seems quite clear that the Labour Party’s reaction to their defeat at the polls was to wait for an issue that they could pounce on and which could fill the airwaves for days. And, behold, Leveson came along and we had live coverage in the Guardian and elsewhere. And what was the point of this? The point was that Murdoch’s Empire is a competitor to the Guardian and the BBC and so, of course, they wanted to drive a stake through Murdoch’s heart by proving how unfit he is to run any business.

    And now the Coalition has an alternative possibility that can drive Leveson off the airwaves and off the front page and show that Balls and co were messing with the economy and thereby put Labour on the back foot. This is all about controlling the news cycle. Labour wants (of course) to spend more money and to prevent any report of its culpability being put in the public domain. The ‘narrative’ being spun by Labour is that they were not responsible for the 2008+ ‘boom and bust’. I heard it on Any Questions last week. Well, an enquiry from a Select Committee, if it is any good, will wipe the smile of Labour faces.

  17. matthu
    Posted July 5, 2012 at 3:26 pm | Permalink

    There is a debate to be had – but any attempt by the government to enforce a whipped vote will quite rightly be seen as an attempt to circumvent democracy and also whitewash the inquiry.

  18. Conrad Jones (Cheam)
    Posted July 5, 2012 at 3:40 pm | Permalink

    The SFO Budget has been cut from £53 million down to £34 million in 2011. It’s Budget is continuing to be cut.

    Sir John Vickers enquiry was formulated by Bankers and did not address the Systemic Problems that exist.

    “To suggest that in the current system bankers monitor their borrowers is just absurd. Did bankers monitor their subprime borrowers? Check what their mortgage borrowers were able to pay? Or maybe we didn’t have a subprime crisis. Maybe I’m just imagining that took place in 2008.”

    “The commission had a responsibility to devise a plan to fix the financial system for good. Whether it was the power of the bankers or the fear of the politicians’ reaction, the commission derelicted its duty. In so doing, it failed the UK as well as the world.”

    http://blogs.ft.com/economistsforum/2011/09/why-the-vickers-report-failed-the-uk-and-the-world/#axzz1zlLiq8oA

    “The banks need fixing now, not in two years time.” – Yes, Agreed – but the ICB Recommendations will not come into effect until 2019.

    The ICB did not see the importance of money creation by Banks and did not address the role of Derivatives. It is not a serious enquiry merely a smoke screen.

  19. Conrad Jones (Cheam)
    Posted July 5, 2012 at 3:52 pm | Permalink

    The ICB recommended that we re-introduce a “Glass-Steagall” style Act or “Gramm-Leach-Bliley Act” when it was repealed by Bill Clinton.

    Does this mean that CitiGroup will now be illegal and have to be split up – but not until 2019 ?

    Funny how the Democrats and Labour seem to be connected to all these abuses of power.

  20. Conrad Jones (Cheam)
    Posted July 5, 2012 at 4:06 pm | Permalink

    ICB: The very things that caused the financial crisis – Derivatives: are seen as ok.

    “An exception is made for derivatives held “as necessary for the retail bank prudently to manage its own risk”. All in all, the ICB reckons this could lead to up to £2.3 trillion of assets being held within the ring-fence – around a third of total UK banking sector assets.”

    http://www.risk.net/risk-magazine/feature/2112157/icb-report-banks-costs-lower-ratings

    Wool pulled over eyes yet again.

    Barclays has over 300 subsidiary companies in Tax Havens, how much Toxic Derivative Waste is floating about out there? The ICB is more concerned with what a Bank calls itself than what it does. If a Bank has certain key words associated with it – such as “Investment” then it will be treated differently, if it doesn’t then it’s a Normal Bank, with full Tax Payer Subsidies and other Tax exemptions.

    “The government has rejected proposals from the ICB that equity should fund at least 4 per cent of the balance sheet of systemically important banks, instead of the 3 per cent proposed by the Basel committee. The government also proposes to let ring-fenced banks offer “simple derivative products” to its clients, contrary to the ICB proposal that these banks act as agents only for their clients. In addition, it has agreed to waive loss-absorbency requirements for foreign subsidiaries of globally significant international banks, provided these entities are believed to pose no risk to the battered UK taxpayers. Finally, the government plans to exempt banks with mandated deposits of less than £25bn from the obligation to set up a ring-fenced retail bank.””

    http://blogs.ft.com/martin-wolf-exchange/2012/07/02/banking-reforms-after-the-libor-scandal/#axzz1zlLiq8oA

  21. Jon
    Posted July 5, 2012 at 6:01 pm | Permalink

    I do agree that we need to just get on and make a start with reducing the liability of the banks now. The problem is so big that trying to tackle it all at once or to even think one type of review or investigation could come up with the magic elixir is wishful thinking.

    Do what we can now, there will be more problems in the future and there will be opportunities in the future to see people being sword at the dock in but lets get on and start chipping away at the edifice now.

    This problem will take a generation and more to resolve so lets do what we are capable of doing bit by bit.

  22. uanime5
    Posted July 5, 2012 at 6:25 pm | Permalink

    Why not implement the findings of the Vickers report now and have the Judge led enquiry in case Vickers missed anything?

    This would be better than the current plan, which seems to be not implementing the Vickers report or having an inquiry.

    • sm
      Posted July 5, 2012 at 10:03 pm | Permalink

      Why else would it be 2019? Enough time to U turn and or water it down to nothing?

    • Mark
      Posted July 5, 2012 at 11:05 pm | Permalink

      That’s a bit like recommending getting of a plane without a parachute while it’s still flying at 40,000 feet. You have to reduce altitude and speed without stalling, land, and taxi to a jetway if you wish to avoid serious injury or death. The same with unwinding the mess at the banks. Try to do it all at once, and the whole system will crash.

      • uanime5
        Posted July 6, 2012 at 8:34 pm | Permalink

        Strictly speaking you don’t need to taxi to a jetway as the plane has build in shoots that allow passengers to disembark. This is the recommended way to leave a plane after an emergency landing (though if the plane breaks apart you can jump out a hole).

  23. Richard
    Posted July 5, 2012 at 9:21 pm | Permalink
    • Richard
      Posted July 6, 2012 at 2:32 pm | Permalink

      You must be an imposter “richard” because i would never say that!

  24. Conrad Jones (Cheam)
    Posted July 5, 2012 at 9:35 pm | Permalink

    What’s the time?

    It’s time for a bailout (que Former Fat Boys).

    “Bank of England pumps £50bn more into economy”
    http://www.bbc.co.uk/news/business-18724010

    Is the Bank of England Pumping £50bn directly into the economy?

    Are we going to see Schools Repaired, Surrey Police recruiting more Policemen, New Hospital Equipment and better NHS Staff pay deals, NHS Continuing Care Assessments makinig more Elderly Elligible for Nursing Care Fees to be paid for by the NHS, the Return of Student Grants to help the next generation of Scientists, Engineers and Teachers, the building of New Homes and the development of a UK Electric Car, Investment in renewable energies …

    No?

    £50 billion is going to be handed over to Private Banks Reserve Accounts – at the Bank of England. Where it will stay becasue it’s not really needed anyway as Banks can make loans without needing additional reserves.

    QE1 – Failed,
    QE2 – Failed,
    QE3 – Will Fail later

    The definition of madness is doing the same thing over and over again expecting the outcome to be different.

    The Bank of England has gone insane. A reassuring thought to go to bed on.

  25. Caterpillar
    Posted July 5, 2012 at 11:23 pm | Permalink

    I find the idea that either a judge-QC double act or a parliamentary committee would have the competence to carry out a banking industry inquiry unlikely. Indeed, having viewed a substantial amount of the Treasury Select Committee’s supposed questioning of Mr Diamond I now underdstand why he was worth 2 orders of magnitude more than an MP, the difference in ability is striking. If it weren’t for the fear that ‘the system’ is out to get Barclays I would even consider moving my accounts there!

    Some observations:-

    (a) I was shocked that the TSC members were unable to meet Mr Diamond on his terms; not able to separate out the <1% of traders who manipulated from the financial collapse period, not able to understand that an external comparator is much easier to see then internal manipulation, and not able to recognise the potential validity of Mr Diamond's warning that Barclays mayhave come out first and been most helpful – if this does turn out to be the case and yet Barclays are the worse treated then this is a potentially hugely dangerous message to send. All the talk about culture and yet the TSC is unable to appreciate its own accentuating of the blame culture (- though admittedly a QC aiding a judge may do this even more).

    (b) I am worried about the effect of conspiracy theories on the UK finance industry – (i) the money printing, inflation target missing, BoE upset that it cannot control all reference rates, (ii) expense-tarnished MPs and phone-tap tarnished media wishing to switch focus to banks …

    (c) I am worried about one theory fits all regulation. After the 1990s accounting scandals (e.g. Enron) the tendency was to blame 'ethics'. 'Ethics' as a route cause demanded business schools to teach ethics, firms to have explicit ethical standards, more regulation and director responsibiltiy, and enhanced reporting. As noted by some strategy theorists (e.g. Barney? 2005???), different theoretical perspectives would give a different take. 'Ethics' might just be an intermediate variable, the root cause might have been strategic failure – the difficulty of continuing to hit market growth expectations leading to other routes of achievement to be considered (- think of what Jo Bloggs can do in a war situation even with normally good ethical standards). Recognising such a viewpoint might suggest business schools should improve strategy and communication (maket expectation) teaching, governments should temper market expectations, and a different view on incentives and rewards be taken. It also highlights that some intial policy thoughts could lead to more problems – more complete reporting reduces competitive advantage leading to strategic failure and more temptation. With the LIBOR fixing scandal again we have politicans jumping on the potential intermediate of 'ethics' and moderator of 'culture', easy targets but not necessarily root cause. Could such publicity seeking opportunism lead to poor policy selection?

  26. Lindsay McDougall
    Posted July 6, 2012 at 8:32 am | Permalink

    I wondered why I took an instant dislike to Andrew Tyrie after seeing his bullying and bad mannered interrogation of Bob Diamond, so I looked up a short bio on Wikepedia.

    He got an MA in PPE at Oxford in 1979. Then he went to the College of Europe in Bruges, gaining a post graduate “Certificate of Advanced European studies”. He worked as Senior Economist at the “European Bank of Reconstruction and Development” from 1992 to 1997.

    His bibliography contains 11 books and pamphlets, including;
    - Subsidiarity: As History and Politics (with Andrew Adonis 1990)
    - Never say Never: Common sense on the Euro (2002)

    This man has is most definitely not ‘One of Us’. He is a 24-carat ‘pro-European’. He has already shown himself to be not fit to lead a Parliamentary inquiry into the LIBOR rate fixing – he condemned Bob Diamond’s testimony as incredible without hearing from any other witnesses, and you can guarantee that he will recommend increased co-operation with EU regulators.

    Andrew Tyrie is precisely the sort of person that should be deselected as a Conservative candidate before the next General Election. Let me spell it out – if we want to claw back support from UKIP, we are going to have to earn it on merit. If the current Prime Minister is not prepared to initiate the necessary purge, then …………………….. Your move, Mr Redwood.

  27. Mark
    Posted July 6, 2012 at 9:53 am | Permalink

    It is well past time that we got round to criminal prosecutions. As was pointed out in Parliament, these might well be jeopardised, and certainly couldn’t be contemporaneous with, a Parliamentary or Judicial enquiry. Professional investigation by professional investigators is needed. If they are led into Whitehall and government by their researches, so be it. But don’t hide prosecutions away in FSA interview rooms: put them in the public domain so that justice can be seen to be done.

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  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
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