The Banks Are At It Again

The banks are at it again. Barclays has been fined £38 million for failing to separate investment clients’ funds from its own money. This is the second fine in three years. Apparently the previous fine of £1 million was not enough to encourage Barclays to comply with its legal obligation to separate clients funds from its own money.

The Ethics of Banking

We are rather a tolerant people. We tolerate the Chief Executives of large banks receiving huge sums of money , ostensibly as wages, when any analysis shows that they are actually doing their jobs very badly and frequently do not deserve even a fraction of what they are paid. Paying people much more than they are worth is a feature of tolerance and sometimes the distinction between tolerance and stupidity becomes very hard to discern.

Banks and Bankers – Old Habits die hard

Eight of Europe’s largest banks have been caught red handed forming cartels to fix interest rates. Two of them, RBS and Barclays had revealed the existence of the cartels and their part in them and as a result they have been spared any penalty. The others, including the hapless and hopeless state owned Royal Bank of Scotland, have been fined €1.7 billion.

The Banking Crisis Continues

The banking crisis has not gone away, but is still with us. Banks have thinly disguised their shortcomings. They are still diseased, even though they have the appearance of modest health. Regulators, at the behest of governments, are trying to cure the patient without killing it. Whether they will succeed remains to be seen. Regulators are prescribing unpleasant medicine which will prevent banks from being as profitable as they once were, in order to try and reduce the risk of bank failure, which is catastrophic not just for the banks and their shareholders, but also for society.

Odd Things – Tax Paid by Giant Corporations

Starbucks, Google, Facebook, Vodaphone, Barclays and other multinationals pay no or very little corporation tax on the profits of their enterprises in the United Kingdom. This is because they do not make profits in the United Kingdom, for corporation tax is paid on the profits of corporations. Nevertheless they turnover billions of pounds in the United Kingdom but make technical losses here and therefore have no corporation tax liabilities.

Mr Diamond’s Performance

When Bob Diamond appeared in Parliament on Thursady to explain how Barclays had managed to manipulate LIBOR rates for fice or so years without the person in charge of the part of the bank that was doing the manipulation (Mr Diamond himself) or subsequently the chap in charge of the bank (also one R Diamond) noticing he stonewalled in a style worthy of General Jackson at the first battle of Bull Run. He stood his ground without conceding an inch and without explaining a jot or tittle or iota. Presumably his arrogance is such that he felt that Parliament (elected by the people) is not worthy of an explanation.

Good Riddance to Bad Rubbish

Diamond gone, Agius gone, del Messier gone, so long and we won’t miss you. In Poplar, we would have said “good riddance to bad rubbish”. Mr Diamond earned more than £20 million a year and only now do we know what you get for £20 million a year in the banking industry. Mr Diamond has left the bank he loved. Whether he will be compensated for his sins remains to be seen. The scandal is just beginning, not ending and the chickens have yet to come home to roost; piece by piece most of what actually happened with LIBOR fixing will unravel.