3 Jul 2012

Bloody scenes at Battle of the Inquiry

The battle over the format of the inquiry into banking is turning into an unlikely and very bloody political battlefield. Listening to some senior Tories you could easily think they were on a mission to kill off  Ed Balls politically. They sound convinced they can link him to murky government links with Barclays and generally get some lost ground back after the omnishambles budget. Ed Balls says it’s all ridiculous as he was schools minister at the time of the Libor scandal. The Tories say Alistair Darling’s own memoirs talk of Ed Balls running a shadow treasury operation throughout the period.

If you think the banking problems are slightly getting lost in all this you may have a point. The slug-fest is ostensibly about whether the right way to inquire into Libor and related scandals is through an all-party parliamentary committee or a judge-led inquiry. It has become about who speaks for Britain, who is most linked to the dark days when banks were allowed to do what they liked and who is left standing by the end of the week.

So what happens on Thursday when Labour loses the vote on whether the banks should be pursued by a judge or by politicians? The vote on the judge-led inquiry will fall and then Labour will either abstain or vote against the chancellor/PM idea of a Lords/Commons committee. Then what? Labour could boycott the resulting committee or join in complaining that it’s inadequate and reap rewards when, at some point, it looks inadequate.

I get the impression after a few chats today that Ed Miliband himself is the one even more wedded to the defiant strategy than anyone else. Some will accuse him of being equally political, determined to repeat or build on his Murdoch triumphs last summer and to stay consistent to his predator/producer cultural analysis of British economic ills.

One Tory MP just said to me he thought it was the chancllor who was “playing politics” – ” he fired a pea shooter at them in the playground and is showing pig-headed arrogance” (not a great admirer of the chancellor, this particular Tory MP).

I thought some Lib Dems might be getting a bit squeamish at all of this but one senior Lib Dem source sounded ready for a bit more blood yet. He spoke of resentment at all the years when Labour was pro-deregulation and Vince Cable was a lonely voice against it. He agreed though that  we were watching a “highly political slug-fest”.

Faisal Islam was explaining tonight about how the FSA and the Bank of England told Bob “Red” Diamond that he should go. I understand that Mervyn King made a check call to George Osborne just before his phone call to “Red” last night. Given the bank’s independence, I presume there was never a question of the chancellor giving the heave-ho the thumbs up or down … but Mervyn King’s “time to go” call went ahead and it is pretty clear the chancellor didn’t plead with him not to go ahead with it.

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3 reader comments

  1. Philip says:

    If Ed Balls was involved in any way in the LIBOR scandal, at least Labour don’t appear to be ducking the issue in demanding a full, open judge-led enquiry rather than the politician-led one the Government wants.(In any case, even if Balls was running a shadow Treasury operation at that time, why on earth would anyone in the City have listened to him rather than the Chancellor? I suspect this is sheer smokescreen because the Government have recognised – from the expenses scandal & the financial crash of 2008 – that it’s the party in power that gets tarnished when these things come out).
    It’s also worth making a point about “liught touch regulation”. It isn’t responsible for what went wrong. It’s utterly dishonest to shift the blame from those behaving irregularly/illegally/corruptly to the regulator or the regulatory system. Of course, if the regulators (BoE, FSA) connived at manipulation of the LIBOR rate, especially if encouraged to do so by Government, that’s a different matter. But that’s because its them also breaking the law or ethical standards.
    You might argue that the 30mph limit is loosely enforced – but if I drive at 50mph & kill a child, the responsibility…

  2. Saltaire Sam says:

    Is it any wonder so many of us feel so much contemmpt for politicians.

    Week after week all we get in the place of reason is point scoring, yah boo yelling.

    Challenge one party about its donors and they say ‘what about the others, they do it?’ as though a defence for wrong doing was that there is other wrong doing.

    Now faced with the need to sort out bankers that have run amok, all they can do is try to score some brownie points in the hope it will give them electoral advantage in three years’ time.

    What the hell do they they think they are doing?

    This constant electioneering, spinning of facts and failure to accept that your opponent is not an entire dick head and might be right on occasions, is as demoralising as the expenses scandal.

    All of which raises even more concerns for me of what will happen when the House of Lords is an echo of the House of Commons, with elected members tied to the party machine.

    I’m all for reform of the Lords but let’s make sure that the people elected are independent and above all don’t act like schoolboys all the time.

  3. citizen smith says:

    Its all a bit pathetic really. lets just do whats best for the country.

    I was listenng to Radio 4 this morning and some bloke (didnt get his name) was almost condoning the rigging of LIBOR because in 2008 the bank was about to collapse and it was an ‘acceptable way’ to avoid the problem. But, the practice had been goig on for 3 or 4 years so his argument is flawed.

    Its about time we stopped ‘rigging’ everything. If a company is in trouble then it goes through due process i.e. gets itself out of debt (through private support…not public support) or it goes into administration/liquidation.

    Break up the big banks aad limit size….. and put in auditable process/procedures that ensure it cannot massage its financial position.

    Makes the ‘stress testing’ null and void doesn’t it? So, how do we know whether the banks are stable or not?

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