Friday, 29 June 2012

Getting in the mood for panto as Bob Diamond is cast as the bad boy of banking

I have been following the shock horror of today's stories about price fixing lending rates by Barclays. It's like being at the panto, everyone slides into well-rehearsed roles and acts out their parts: "Was Bob Diamond a naughty boy?" "Oh yes he was." "Oh no he wasn't." Fun though all this is, I have an observation to offer which is: why is anyone surprised? Barclays was just doing its job as it saw it and no doubt continues to see it and, to underline my point, who broke this story? Barclays did.

Contrary to popular belief, I am sure Bob Diamond sleeps very well. He is absolutely clear that his job is to ensure maximum return for his shareholders, that is it, nothing more. So he does what has to be done to ensure that profits are the priority, morality really isn't the point. I bet in his interview for the job, happy high-street account holders and investment in small businesses never came up.

International banks are just doing their job as they see it, working  the business model they have created. But if shoddy acts are all we can expect, it was not always so. Did you know Barclays was set up by the Quakers? The founding fathers of Barclays way back in the 1690s were devout men who founded the bank to ensure their work as goldsmiths was properly financed, even though their religious beliefs put them beyond the pale of conventional lenders.

So what's my point? It is that by expressing a universal revulsion at the lack of moral behaviour in a banking system set up to exploit every weakness in the system isn't logical. On the other hand, supporting a banking system that aims to balance the interests of borrowers and investors as well as shareholders makes perfect sense. Banks like Charity and Triodos are the good guys and we should all support them or they will remain too small to influence the market. And what about those local heroes, credit unions? I  would be surprised if the Co-operative Bank is ever fingered in the growing accusations of misselling or rate fixing.

Mutualisation of money has to be part of the answer, not just regulation, if we are to avoid waking up to yet another scandal depicting more bad banking behaviour. Barclays is the first in the dock but it won't be the last. In a market controlled by a few big players no single bank could set prices independently of the others. I am guessing the formidable Bob Diamond is earning his reputation as a great strategist by breaking the story early, time will tell.

We need banks, we need them to be healthy and profitable because economic growth and prosperity depends on their stable existence, but can we have more good ones please? Banks that play by the rules without all the drama?


  1. OK so I didn't see that coming. Bob Diamond's resignation today as a result of political pressure was probably not what he had in mind when he broke the rate fixing story. It seems this story is going to run and run, people are already comparing it to the News corp scandal. We shall see.

  2. this is just too cool for words! :)
    great job!

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  4. So what's my point? It is that by expressing a universal revulsion at the lack of moral behaviour in a banking system set up to exploit every weakness in the system isn't logical.GW2 Gold