So why are the Tories so determined to block a proper judge-led inquiry into the whole corrupt culture of banking which is so obviously needed? Their only argument is the need for speed to deal with the shocking LIBOR revelations. Ed Miliband today at PMQs neatly overturned that argument by saying that a judge-led inquiry should concentrate immediately on the LIBOR issue and report on it by the end of December, and that then their wider but time-limited inquiry should report on the broader record and culture of the banks within the next 12 months. Cameron would have none of it. Why? I would strongly surmise that he knows there is a lot in the incestuous relationship between the Tory party and the banks, from whom the Tories get no less than half thie entire annual income, which he and the government would be devastated if the truth fully came out. You don’t give tens of millions of pounds a year to an organisation without expecting, and getting, a great deal in return. A Leveson-style inquiry would reveal what.
But there is another, even stronger reason why we ne need a wider and deeper inquiry than just about LIBOR – awful though that stench is. It’s not even just about the repeated series of scandals that keep tumbling out of the City year after year – the mis-selling of private pensions, the mis-selling of PPI, and now the mis-selling of credit swaps, to mention only the more recent examples of fraud, each one involving billions. What this is ultimately all about is the structure, role, style and function of banking in Britain, all of which have become grossly distorted. The fall-out from this will be huge and the reconstruction demanded enormous.
The central questions are no less than: what are banks for, and are they performing that role effectively in the national interest? At present the banks are heavily focused on property, overseas speculation, toxic derivatives and tax avoidance in their own self-centred interest, not at all on industry and exports which are the priorities for the national interest. They regularly boast of their financial innovation, but it always turns out to be one financial engineering wheeze or scam after another which is motivated by short-term profiteering, as we saw above all with the sub-prime and securitisation fiasco which was excessively profitable for a time and then nearly crashed the entire global economy – a catastrophe for which the banks have neither been held to account nor punished. Until these over-sized and self-interested banks are completely reconstructed and are forced to adopt fundamentally different goals, Britain will not recover from the present deepening slump.