By James Salmon, Rob Davies And Helen Power and This Is Money Reporter
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Justice Secretary Ken Clarke said financial crime was 'easier to get away with'
A full-scale Leveson-style inquiry into banking culture and practices has been called by MP as the City was rocked by two major scandals in the space of a week.
And bankers who have committed crimes must be brought to trial, Justice Secretary Ken Clarke insisted today.
Asked about the two major scandals that have rocked the City this week, Mr Clarke acknowledged that financial crime was 'easier to get away with' than virtually any other misdemeanours, but he said there should be criminal investigations and prosecutions where crimes have been committed.
'We are very bad at prosecuting financial crime in this country,' he told the BBC Radio 4 Today programme.
'I suspect financial crime is easier to get away with in this country than practically any other sort of crime. This is still being investigated, no doubt, but once these investigations are complete, if they have committed criminal offences they should be brought to trial.'
Outrage: Ed Milliband called for a public inquiry, while last night Mr Cameron launched his strongest attack yet on Bob Diamond
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The ‘shoddy and deceitful’ behaviour of banks cannot go unpunished, David Cameron was told, with Labour leader Ed Miliband demanding the Prime Minister set up a judicial investigation that would lead to a standards board and code of conduct.
Mr Miliband pushed for a 12-month probe to 'find out what is going on in the dark corners of the banks' after the FSA uncovered 'serious failings' in the sale of complex financial products to small businesses, just days after the rate-rigging affair emerged at Barclays.
Taxpayer-backed Royal Bank of Scotland also confirmed it was being investigated for manipulating the rates at which banks lend to each other, known as Libor.
In an interview with The Times, Mr Miliband said: 'There hasn't been a proper reckoning for what happened in the banking crisis. The bankers told us - it's all fine, we've cleaned everything up. But I'm afraid that doesn't hold water anymore.'
Calling for a systemic look at the customs and practices of the industry, he added: 'We've got to have an open, independent inquiry with hearings to find out what is going on in the dark corners of the banks.
'Some of it clearly was illegal, but it goes well beyond that. There is a problem with how people operate. This isn't just about regulation, it's also about culture and ethics.'
U.S. TO DEMAND BARCLAYS BANK TRADERS EXTRADITED ON CRIMINAL CHARGES
Up to 15 staff in the Barclays UK offices have been disciplined or sacked in the wake of the crisis interest rate rigging scandal.
But now it has been revealed that six UK Barclay traders could be extradited to the US to face criminal charges over the saga which has seen billions wiped off the bank's value.
Investigators in the US have narrowed down six employees they believe could be brought before their court, reported the Daily Mirror.
The bank - which was fined £290million by UK and American authorities for cheating customers - has signed a non-prosecution agreement with the US Department of Justice.
However the deal does not stop individual staff from being investigated and charged.
Last night the US regulator Commodity Futures Trading Commission confirmed its interest rate investigation is continuing to the newspaper, but declined to comment on individuals under scrutiny.
He called for a tough new code of conduct introduced and jail sentences for immoral bankers who abuse the system.
He added: 'It should be about probity, honesty, integrity. Bankers should be struck off if they do the wrong thing...this is not a victimless crime.'
Business Secretary Vince Cable has admitted that the banking sector is a 'massive cesspit' that needs clearing up.
Revelations that traders conspired for years to rig key Libor interest rates have created a widespread feeling that only a truth and reconciliation inquiry can restore trust in an industry vital for economic recovery.
Mr Cameron last night launched his strongest attack yet on Bob Diamond, Britain’s highest paid bank boss.
Asked whether Mr Diamond, who earned £18million last year, was the right man to lead Barclays, the Prime Minister replied: ‘I can’t say that. He has questions to answer.’
Meanwhile shareholders, pension funds and powerful business groups yesterday ratcheted up the pressure on Barclays boss Bob Diamond and chairman Marcus Agius to quit as they became tainted by yet another scandal.
As Barclays came under fire from all quarters, analysts warned the bank had reached a ‘tipping point’, claiming the threat of litigation from customers and rival banks could saddle it with huge legal costs.
Yesterday Barclays, along with Royal Bank of Scotland, Lloyds and HSBC were found guilty of mis-selling toxic loans to small businesses and ordered to pay compensation.
This follows the £290m fine on Wednesday by US and UK regulators for rigging crucial LIBOR interest rates used to set loans and mortgages, as well as trillions of pounds in complex derivatives.
City big hitters yesterday made it clear that Diamond’s decision to give up his bonus would not be enough, warning he and his fellow bank bosses should start paying with their jobs.
Vince Cable, Secretary of State for Business called bank culture a 'cesspit'
Simon Walker, director general of the Institute of Directors, said: ‘It is high time for a clear-out of the leaders who created this mess, and they should be replaced with new blood.’
Public disgust at Barclays’ reputation for ‘casino’ banking spilled over to the City, with leading shareholders demanding answers from the Barclays boss over the interest rate rigging scandal.
A group of big pension and insurance funds are pushing Barclays to dump Diamond â€" formerly the boss of the investment bank â€" as part of a wider move to scale back its ‘casino banking’ activities.
Barclays is also thought to be under pressure to bring forward the retirement of its chairman Marcus Agius in a bid to appease angry shareholders.
It is believed Agius had planned to announce his retirement from Barclays at some point later this year in a bid to give the bank time to find his successor before he left.
An official in charge of boardroom behaviour at one of the FTSE’s major institutional investors said: ‘There are urgent questions about the tone set from the top of Barclays Bank, and that includes the chairman, chief executive and non-executives.What was the chairman doing in all of this? It’s probably time he was retiring.’
Jane Coffey, head of UK equities at mutual Royal London Asset Management, added: ‘If this is a few rogue traders then Diamond’s job is not on the line, but it doesn’t look as if it was just rogue traders.
‘If it’s a serious failing of culture within the organisation that he was in charge of, giving up his bonus is probably not enough.’ Analysts at Oriel Securities warned Barclays could face a ‘litigation minefield’ over the latest scandals, which could be a ‘tipping point’ for the bank.
Vivek Raja said: ‘It’s a potential litigation minefield.
‘Barclays could be flooded with law suits from retail and small business customers claiming for mis-sold loans and mortgages linked to LIBOR.
‘Even if the success rate of claims is low, the cost of processing claims could be significant.’
There are growing fears that the fixing of interest rates could have hit UK pension funds which invest in these complex investments.
Pension funds headed by lobby group the National Association of Pension Funds questioned whether they have lost out as a result of the manipulation of LIBOR. Â
Sir Roger Carr, president of business lobby group the CBI, said: ‘The weakness must be addressed and the culprits punished.
‘We should be mindful, however, of the importance of banking to the UK economy and that throwing the baby out with bathwater is in no one’s interest, providing the baby is clean.’
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Its getting tough Dave.You might have to do a few things soon instead talking about them.
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You must be having a Laugh, the Puppets don't control the Puppet Masters. How long is it going to take before you realise who Controls the System, Dynastical Bankers control Governments. Governments do not have the Backbone to stand up to the Dynastical Bankers, you have lost the plot if you think otherwise. It's just like expecting the Media to tell you about the Puppet Masters Grand Project, which they are now bringing to Fruition. None of the events you are witnessing, Financial or catastrophic weather events are natural, they are contrived and engineered to suit their Biblical Armageddon Prediction. They will put all the catastrophic events down to the work of GOD. Their finger prints might not be directly on it but their DNA runs right through all the events.
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The bankers are doing the best they can and most bankers are kind and generous but some like to grab a bit extra from the customers to pay for a new house or sports car
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The government dare not bring the bankers to book because it would open the biggest can of worms since Profumo. The only way is to select an ethical banking organisation and get rid very quickly any Barclay shares that you may hold. The market will react and apportion blame so to save others.
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I wasn't aware being a banker meant I could get away with crime. Ill need to get a part time job at a bank and sell drugs on the side.
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According to some media outlets, you'd think Milliband was PM. How come Barclays was investigated, fined and that was the first we new about it? Why wasn't this news when it first came to light? The political system is complicit. They want to be careful what they wish for. Why is Milliband calling for justice? This all happened under Labour's watch.
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The Government and the Bankers should look in the dictionary for the definition of two words. honesty and integrity.
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Surely Merve the Swerve has been artificially fixing down the interest rate for years? Or am I missing something?
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So should mps
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I think the general public would rather get all their money back stolen by these creeps over the years. Make available 25 year fixed rate 2% mortgages that anyone can switch onto - no TCs. Sending them to Jail sounds like a fine idea, but in practice it'll never happen. What must be avoided from here on in, is sending "penalty" monies from the UK economy abroad, where it represents a loss to the UK as a whole. SEC CFTC in america got far too much of the barclays penalty already, so let's not repeat that mistake!
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