HSBC is patently out of control: it must be broken up

The lesson of the HSBC debacle is not merely that tax evaders must be hunted down much more relentlessly, but that in its present form it’s ungovernable.   It’s no good saying HSBC was run in a ‘federated way’, but now management has been tightened up (is anybody really taken in by that anyway?).   We were told that in 2012 when the HSBC Mexican bank was found guilty of money laundering for pariah states, drug cartels and big mafia crime syndicates, but 3 years later the same charges have erupted elsewhere.   A senior US Department of Justice official got it right when he said that HSBC’s culture was “pervasively polluted”.   The truth is that HSBC, once a cautious and conservative organisation, was derailed in the late 1990s by its chairman Sir John Bond into a huge overseas buying spree to satisfy the board’s ambition to turn it into a global empire.  Any idea of serving the interests of Britain was pushed to the margins and the empire-building avarice of Bond took over and went wild.

What is a bank for?   Its function should be as an intermediary bringing together the savings of depositors and allocating them judiciously for well-chosen productive investments.   However under the influence of the ideology of unalloyed market power exalted by neoliberal capitalism over the last three decades, the banks have taken on the role of corporate expansion and profit maximization in their own right.   Overwhelmingly bank lending has been shifted towards overseas speculation, devising and promoting of artificial tax evasion and avoidance schemes, buying and selling of prime property particularly in central London, and the invention and marketing of exotic financial derivatives.   Only a shockingly small 8% of UK bank lending was allocated to productive investment in the British economy.

This perversion of the proper role of banks was aimed to satisfy the desires of the super-rich (euphemistically  described as ‘high net worth individuals’) because that is where it was perceived that the biggest profits lay – and, though this was played down, the biggest risks. The latter is exactly what happened with HSBC’s purchase for £9bn in 2003 of Household, a US sub-prime lender that went bust in 2006, the purchase in 2002 of the Mexican bank that allowed Mexican and Colombian drug cartels to launder nearly $1bn through HSBC, and then HSBC’s Swiss bank providing a no-questions-asked cash machine for super-rich tax evaders and avoiders.

So what should be done?   The neoliberal business model for banks has irretrievably broken down.   There is no question but that HSBC should be broken up.   We need smaller banks targeted on the real needs of the British economy, and if the private sector cannot deliver this, the big banks should be taken into public ownership.   Also, accountability has completely collapsed in the financial sector, as the depredations of Bond and Green clearly reveal.   The closed circle of City of London insiders, largely from the same class and the same universities, also needs to be broken up.   I will return to that on another day.


9 thoughts on “HSBC is patently out of control: it must be broken up

  1. While HSBC is centre stage for the results of neoliberal business models, Maximus is creeping around like Nosfertu on the Welfare to work & Disability sector (business model of neoliberal government privatisation).

    I would ask Michael to look closely at their holding, government contacts and now their bid to buy the rump of Remploy (where the inherited government contracts will more than pay on the outlay). They will be the HSBC of the disability “industry” in the UK. They will end up having almost total control of all aspects of ill-health, benefits, Workfare and much more in addition to their most recent acquisition the WCA testing for the DWP.

    Let’s take a hard look at all aspects of the neoliberal business model that has been forced upon us – in banking, industry, welfare, state services and delivery. Let’s see them all for the ghoulish corpse-rakers they are. We, the “little people” are not just profit centres and resource-drains and overheads and costs to be cut from central spending; in truth we are the only generators of wealth, because we actually WORK and we pay TAXES. In truth, we own them, not the other way around.

  2. You pick on one bank but they are all guilty of fraud banksters need locking up .
    I see maximus once again in the news this lot of degenerate crooked gangster’s has that whot they are taking backhanders and so called jobs for the boys isnt this fraudulent by our unelected government when those ninty nine percent who aint rich wake up to the fact they been lied to then look out but for ministers or officials to say they didn’t now about these companies fraudulent ways to the American tax payers then they are lying through their teeth you only have to look online if labour isnt going to throw these companies out then you are still little torys and when the peoples wake up to the fact that they been taken has fools robbed mugged by our politicians then look out jeff3

  3. Not one banker has been put in jail for clear fraud. Riggin of Libor, rigging of Gold Indexes etc. All fines have gone to the ombudsman. The FCA is a sham or an organisation. We have no banking ombudsman. All fines should be collected together and given to the poorest of people in this country

  4. What is a bank for? Its function should be as an intermediary bringing together the savings of depositors and allocating them judiciously for well-chosen productive investments.

    I am sorry Michael. If I was to put money in a bank, which I do not now that i understand the fraud the banking system is, I put it in because it is mine and because I thought the bank was a safe place. I do not put money into a bank so the bank can create 9 times more out of thin air, fractional reserve banking. I do not put money into a bank so it can give mortgages, loans etc to people and businesses. That is my money and only mine. If they ask me politely and give me a cut on the interest rates they charge then I may consider allowing them to use it for other purproses. But since I know a bank creates money out of thin air and DOES NOT borrow anybody any money, they can bugger off. They DO NOT to use my money to continue,

  5. I also agree with both comments above; that cite MAXIMUS and the continuing attack, (by both our political parties,) on our beleaguered benefit system and on our unemployed, our sick and our disabled, as being far more urgent and important to most voter than yet more empty hysteria and professionally outraged flatulence about HSBC, (which is old news anyway.)

    Once again it’s the old cry of, “don’t look at us, look at them they’re so much worse than we are.”

    In fact there’s no discernible difference whatsoever.

    Meanwhile and in full sight of everyone, our sick, disabled, old and even the most vulnerable of our unemployed are being abused, brutalized systematically eliminated from government statistics by any and all means possible and Ed Miliband is not only perfectly sanguine about all this but he apparently regards it as being basically; pretty cool.

  6. An old friend of ours who suffer acutely from acute agoraphobia and debilitating and paralyzing panic attacks, (it really is no joke and limits what she can do massively,) was initially told by her support group following an assessment that she needed more and more specialized support than her ESA advisors could provide has now been told that they’ll get a member of staff to stand out side with her for a bit; to help her get over it.

    This sounds exactly like my wifes assessment, which was supposed to unrelated to her benefit claim; when she was told by a, (medically unqualified,) physiotherapist, that there was no such thing as osteoarthritis, X rays don’t work, the diagnoses of 2 consultants and several GPs were completely wrong, and whose brutal and insensitive physical examination left her barely able to move and in excruciating pain for the best part of a week afterward.

  7. The whole financial sector is dysfunctional, the only solution is to nationalise it.

    Nationalise the whole banking system, we could cure money laundering, wholsale fraud, and off shoring over night, any politician that says otherwise is just a Banker’s poodle.

  8. “Blank and White,” pretty much sums up the Tories perfectly.

    As someone who struggles constantly with grammar, etc and also with poor typing skills, I can’t begin to express just how much that’s just cheered me up.

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