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The Serious Fraud Office (SFO) has confirmed that it has formally launched an investigation into the rigging of the inter-bank lending rate, Libor.
Earlier this week, it said it was considering whether criminal prosecutions would be possible.
An SFO spokesperson confirmed that a dedicated case team had now started work.
I have given way twice and I will not give way any more because of lack of time.
Fundamental change in this House would be required of the type that simply has not taken place. It is such fundamental reform that we need, rather than the messing about that we have with the House of Lords, which will go absolutely nowhere.
The inquiry that the Opposition are calling for today could establish what we need to do in order to legislate to clean up the setting of the LIBOR rate. That could be dealt with and expedited, but when it comes to the underlying issues and the people involved, we are talking about criminal activity. Let us remember that, at a time when taxpayers’ money was being poured into the banking system to prop it up, these people were acting in their own personal interest and to profit Barclays and other banks, and against the interests of the country. In fact, it could even be called treason. These people belong behind bars, and the inquiry that needs to take place here—[ Interruption. ] Millionaires’ row over there are giggling at that, but I can tell them that the public out there do not think it is funny. We need to have a proper investigation, independent of this House, that will satisfy the public.
On the first point, with regard to Barclays we have all the facts relating to LIBOR. The report is comprehensive, as most people who have read it would admit, and, along with the US Justice Department’s report, gives us the facts we need. There will be new facts to come when the FSA reports on other banks, an important matter to which I will return. The FSA report on Barclays shows two things: traders fiddled for their own gain before the crash; and Barclays as an institution low-balled after the crash in order to protect itself. Both behaviours are unethical, and when I asked Mr Diamond about that yesterday he said, “Yes, they are unethical.” As I understand it, arrests may have been made and further arrests can be anticipated, so the facts are clear. What we need to know now is what we should do about it.
..because as the hon. Member for Dundee East (Stewart Hosie) and the right hon. Member for Haltemprice and Howden (Mr Davis) have said, this issue goes way beyond fiddling the LIBOR rate. This is a much bigger issue, and it is the bigger issue that needs to be addressed.
but even if the most pious, puritanical person is put in charge of a den of inequity, they will eventually be corrupted.
why are the Government so coy about a genuinely independent inquiry? Is it because of their fears over what a Leveson-style inquiry into banking might expose? After all, the City, which is a pretty hard-nosed institution, does not give half its total income to the Tory party year after year for nothing. It expects, and undoubtedly gets, a great deal in return. Is that why the scams that repeatedly tumble out of the City under the false pretence of financial innovation, such as the mis-selling of private pensions in the 1970s, which has not yet been mentioned, and the recent mis-selling of payment protection insurance and credit default swaps, have always been treated so lightly?
Why has the incestuous relationship between the credit rating agencies and those whose creditworthiness they are supposed to be assessing been left untouched by the Government, when it allowed junk derivatives to be sold around the world with a triple A rating? What is the answer to all these questions? I think that they are very significant. Why has the colossal scandal of tax avoidance on the industrial scale of £42 billion a year, in which the City is so intimately involved, been ignored so unscrupulously?
I shall give an example. The Government set up the Aaronson group to consider the issue, led by a lawyer who has always represented the tax avoidance industry and never Her Majesty’s Revenue and Customs. On the first page of its report last November, that group said that a general anti-avoidance rule was not necessary. It produced the preposterous proposal that if there were such a rule, HMRC would have to seek the permission of an external body before it could be used. It gets worse, because there would have to be a majority of tax avoidance industry representatives on that body. Not surprisingly, the Government have accepted those recommendations in full. That shows the inordinate lengths to which they will go to protect the City by appearing to do something but in reality elaborately constructing a paper aeroplane in the sure knowledge that it will not fly. Those are just some of the reasons, and I believe a lot more remain hidden, why the Government do not want a judge-led inquiry at any price.
We have so far been silent on the real cause of these difficulties and manipulations. I refer to the problem of deregulation, which has made all this possible. The deregulation here—the big bang—was followed in the United States by the repeal of Glass-Steagall under Bill Clinton. That was the 1937 legislation that wisely enforced the separation of the utility, trading arms and the
5 July 2012 : Column 1155
merchant-banking, casino-gambling arms of the banks. It made distinct entities of them. After its repeal, banks here and there began to come together, with the trading arms subordinated to the gambling-casino, merchant-banking activities, and that set the tone and the ethics.
The result was the end of the old neighbourhood banking system of friendly bank managers in cupboards advising us on what to do with our money and providing money for mortgages and small businesses. All that went, and we had the spectacle of the kind of gambling made possible by all these inventive processes, such as the slicing and dicing, and parcelling out of debt, securitisation, derivative gambling—a form of gambling without gambling tax—sub-prime mortgages and now LIBOR manipulation.
All those practices were made possible by the new ethics of the merchant banks. A new greed entered banking, and the only ethic at the top was greed. If people such as merchant bankers have too much power, it follows that they will abuse it. It follows that if they have too much power, they have to be regulated. It was the repeal of regulation and the passion of both parties—the Tories were more passionately anti-regulation than we were, but we still deregulated too much—that created the opportunity for this to break out into the mess that it did.
The manner in which some of these banks have been operating is absolutely unbelievable. If I could not see it in writing myself or hear what constituents were saying, I would not have believed it, as there has been 100% hedging of some of the loans offered.
Originally posted by PlanetXisHERE
nothing significant will be accomplished until we have a new system - if the old machinery that has supported the corrupt system for decades/centuries is supposedly "investigating" this, it actually worries me as to their real agenda.
Originally posted by Extralien
Why has this "glitch" appeared elsewhere, if it is infact a glitch..
It could be the banks setting their systems up for a deliberate collapse and/or to hide all that is wrong..
Originally posted by trustnothing
Same as always, protect the City, that square mile of independant offshore Roman state which has resisted amalgamation into the UK many times, the last being the late 1800s.
As you can see from my first comment, the Tory benches actually found it funny when the words criminal offences and treason were mentioned. The public are indeed not laughing with them. A very large number of these MPs are former finance people, themselves of course they probably still own shares in some cases. Would be interesting to look at board memberships as an indicator of likeliness of supporting reform
It was reported in the Independent in December 2011 that Danny Alexander had been involved in meetings with bankers lobbying to avoid proposals in the Vickers Report that were intended to reduce risks in the banking industry. The talks were alleged to be secret, but were obtained via a Freedom of Information request.
Originally posted by Maxmars
[remainder removed because it's too depressing to convey]
Originally posted by BMorris
If I were in charge as a dictator, any bank found guilty of this would find:
* Its entire executive board jailed,
* The executive board members homes/yachts/cars/bank accounts confiscated under the "proceeds of crime" law.
* The executive board members banned from ever working in the financial industry after their jail term.
* The bank itself will be nationalised, permanently, as they can't be trusted to play fair.
However, Im not in charge. What will happen is they will recieve fines that when compared to how much their crime earned them, are tiny. Then they are told they are bad boys and girls, and are not to do it again. Hardly a deterrent, iis it?