After a blizzard of revelations of financial wrongdoing over this last year, without parallel in recent history, what do the following have in common: Barclays forced to pay $360m over its manipulation of Libor, HSBC fined $1.7bn for maoney-laundering and flouting sanctions, Standard Chartered made to pay $667m over breached in sanction laws, BP penalised $4.5bn for criminal damage and regulatory failings over the oil rig explosion in the Gulf of Mexico, GlaxoSmithKline fined $3bn for selling anti-depressants for unapproved uses on children, RBS awaiting a big fine over Libor fixing, Rolls-Royce under investigation for allegations of bribery, to name but some? They are all British companies that have committed very serious offences, but they were not prosecuted by British regulators at all, only by US ones. The pretence that Britain has a working regulatory system, when actually it is toothless, inefficient and incompetent, is a national scandal. How can such a stark and reprehensible failure have happened?
It is because the politicians wanted it that way. ‘Light touch regulation’ was the order of the day under Blair since the real political aim was (1) to suck up to the corporate and financial elites, (2) to promote the City of London, (3) to attract inward investment, and (4) to enhance the de-regulated free market paradigm of neoliberal capitalism in line with the so-called US Washington Consensus. Regulation didn’t enter into it. The worrying thing is that nothing has changed.
Five years after the Great Crash, there has been no banking reform worth the name and UK regulators are still well behind the curve both in taking any action at all and in lightness of wrist-slapping even when they do. Shifting powers from the FSA to the Bank of England, as the Tories are now doing, is merely a facade to give the pretence that something is really happening. It won’t whilst the Tory party continues to draw half its funds from the banks and the finance sector.
Even when, rarely, penalties are imposed, their level is derisory. Whereas Barclays was forced to pay $360m to the US authorities for rigging Libor, the FSA penalty was a mere £59m. Such figures are regarded by rampant privateers like Barclays, not as a deterrent, but merely the small change that they have occasionally to put up with in order to continue with their life of untrammelled law-breaking. The banks are laughing all the way to …….the bank. After the biggest heist in history, they believe the system, or rather lack of it, has allowed them to get away with it scot-free.