Fox (n): carnivore of genus vulpes; crafty person; scavenger; (vb) to confuse; -ed (adj): to be drunk.

Thursday, 28 June 2012

Too big to jail.

ANOTHER day, another round of fury about bankers acting a lot like, well, bankers.

Turns out a bunch of traders at Barclays were telling porky pies about their finances in order to make more money, which is a neat trick if you can pull it off and for some reason doesn't work with my bank manager.

But then, if you have an awful lot of money, you are allowed to do an awful lot more things with it than the rest of us.

An investigation found Barclays traders fed false information into the system which is used to set the interest rate for banks lending to each other. The rates were lowered to make the bank look healthier, and then the traders gambled on whether the rate would go up or down and made a healthy profit.

The net effect was higher mortgage payments and loan rates for us, and more cash for them.

Cue the normal reactions, which include a £290million fine, calls for the boss to be sacked, the Prime Minister talking about "serious questions to answer", some low-grade grumbles about no police investigation and demands the bank be broken up.

And because those are the normal reactions, nothing's going to change. That fine is equivalent to 10 days' profits for Barclays in the first quarter of this year, the boss wasn't directly involved, the police are too busy investigating journalists to have any officers spare and seeing as the bank was healthy enough not to need a bailout it won't be closed.

Instead that fine will get passed on to the bank's 48million customers and the boss, Bob Diamond, won't be taking his bonus this year. The chances are he wouldn't have got much of it anyway, as the share price has dropped nearly 30 per cent since March.

No-one is going to stop to ask why anyone thought it was a good idea that banks should have so much influence over the lending rates. No-one is going to treat the people responsible in the same way as a benefit cheat who'd been found lying about the cash in his pocket. No-one is going to do anything except sit and wait for other banks to be found out doing the same thing.

And that's the heart of the problem that seems to escalate day after day - the way in which some people are treated differently because they're rich, whether they deserve it or not.

Had someone on £30,000 a year been able to shuffle their earnings through a tax-free loan from Jersey like comedian Jimmy Carr, they'd have the taxman on them quicker'n you could say "but it's all perfectly legal, honest".

Had someone gone into a branch of Barclays and told bare-faced lies about the health of their finances in order to wangle some cash they could expect to be prosecuted for fraud, the penalty for which would be more than 10 days' pay and would probably involve jail.

And had it been you or I so found guilty, the Prime Minister would denounce us as morally wrong in front of the first TV camera he could find. He wouldn't bother asking us any questions at all, but dismiss us as the undeserving poor.

So what would happen if we started treating the undeserving rich the same way?

The prison system would collapse, for a start. Seeing as the courts give six month sentences for stealing a £3.50 case of bottled water, the undeserving rich would have to spend several lifetimes in jail for tax avoidance, fiddling the books and tinkering with interest rates and we'd have to spend £38,000 a year on each of them to keep them there.

Hardly ideal. As a result it would be a far more practical - and cheaper - solution to make the incredibly wealthy do community service instead.

Disgraced bankers could help small businesses fill in loan applications so that they actually get accepted, and negotiate mortgage deals for first-time buyers so the housing market can be breathed back to life.

Accountants who exploit every loophole in the tax code could do some unpaid work experience at the Treasury helping to close them.

Millionaires who pay single figures of tax will be made to mop the floors of a busy A&E on Saturday nights while patients puke on their shoes, and Croxteth will be turned into the world's most lucrative tax haven so that billionaires who are domiciled elsewhere for tax purposes will have to live there 275 days a year. When they've done it all up the tax haven will get shifted to Forest Gate, then Hartlepool, and Margate...

Each of them will take a turn in front of Jeremy Paxman to explain themselves.

And afterwards they can be released on a tag and made to work on probation for the Treasury, because as they are so good finding a way to make a profit out of everything they can put that skill to good use for us rather than themselves.

Perhaps that way the Ministry of Defence wouldn't find itself suddenly sitting on £6.6bn of over-ordered, unused and defunct bits of kit.

Once the filthy rich have raised GDP, tax receipts, lending, and national productivity they will have answered all our most serious questions and proved that bankers can be very useful indeed - so long as there's someone keeping an eye on them and they're not allowed to rampage unsupervised around the world's financial systems like troublesome toddlers who've missed their Ritalin.

No-one's too big for a spank.


martin sutton said...


Zeds said...


Joe said...

So you and I paid more for the mortgage and got less on savings. So who gets the £290 million?

Anonymous said...

One of your better ones Foxy. The bankers and their ideology are bankrupt both morally and financially.

Maybe we need to start putting up guillotines in the square mile and start having public executions of bankers?

Midsomercounty said...

There are factual errors in this - if LIBOR goes down then so does the rate at which consumers and companies pay interest (see Martin Lewis on Twitter today). Furthermore, Peter Mandelson was found to have submitted false financial details to a bank far from being jailed he's become a Lord... which rather says it all about power in the UK

Matt said...

"Had someone gone into a branch of Barclays and told bare-faced lies about the health of their finances in order to wangle some cash they could expect to be prosecuted for fraud"

Nope, this was what was called a 'fast track' mortgage. It meant banks took you at your word that you could afford the payments (which in turn helped exacerbate the banking crisis).

What is needed is for those who should have been regulating this to be charged with negligence, what is the point of the FSA if it didn't pick this up?

Foxy said...

The 'net effect'is that eventually everyone's paid more. That's not a factual error.

ravylesley said...

As the holder of a Mortgage that is linked to LIBOR I have often wondered why my payments are constantly increasing when the BofE maintains interest rates.Now I know!! I was paying for some Bankers new Ferrari or a holiday home in Barbados that makes me feel so much better lol

expansionlink said...

Wonderful writing. No doubt the £290m fine will be paid with barely a blink of a banker's eyelid. However, if somebody with a balaclava and a stripy T shirt stole that much they'd get banged up for years. It's about time bankers learned the real value of the stuff they play with, mainly because it belongs to us.

The Auld Phart said...

Is it just me, or does there appear to be a puddle-swell gaining momentum against bankers and the very rich?

analiensaturn said...

Don't be sending that shit to our crocky

Anonymous said...

Do you not think you should correct the piece about it costing mortgage payers more? If LIBOR drops and so does the floating rate linked to mortgages then they will pay less. If LIBOR drops and they don't drop the rate (as is most often the case) then the bank would just make slightly more money (but only on the money it borrows, profit from loans backed by deposits would say the same).

Apart from that I can see your point. The rich should pay more than their fair share (to support those who cannot contribute and require support), however the balance to be struck is where you ask for so much that it's *far* cheaper to avoid it. Scrap the 40 & 50% rates and bring it back in somewhere in the region of 30% and you'd get more people paying and would probably end up with a larger tax take.

As a slight aside for the comment piece can you add the option to comment as a twitter account, or have I not understood how to do that?

Anonymous said...

Steal a little and they throw you in jail, steal a lot and they make you king...

Anonymous said...

Haha That's all we need

SoupWaiter said...

whenever there's a recession the politicians put up a patsy for us to vent on, anyone who's got money will do. the real problem is governments don't save in boom years to cover the recessions, instead they bloat the civil service to get unemployment figures down. Libor rates and toxic debts are just fluff and nonsense to make people feel like they understand what went wrong and whose fault it was.

Anonymous said...

Six months for being part of the riots and committing a looting offence. Not simple theft.

Post a Comment