By James Chapman
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The ‘shoddy and deceitful’ behaviour of banks should be probed at a public inquiry, David Cameron was told.
Following an extraordinary week of scandal and disgrace, senior politicians and church leaders called for a financial equivalent of Lord Leveson’s Press inquiry.
Labour leader Ed Miliband wants the Prime Minister to set up a judicial investigation into the banking world that would lead to a standards board and code of conduct.
Time for action: Labour leader Ed Miliband, left, has called on Prime Minister David Cameron, right, to set up a judicial investigation into the banking world
Revelations that traders conspired for years to rig key interest rates have created a widespread feeling that only a truth and reconciliation inquiry can restore trust in an industry vital for economic recovery.
To make matters worse, Barclays, HSBC, Lloyds and Royal Bank of Scotland were censured yesterday for selling risky and inappropriate insurance to thousands of small firms.
The Financial Services Authority said the big four missold hard-to-understand interest rate swaps to thousands of businesses, leading some of them to go bust.
Mr Cameron last night launched his strongest attack yet on Bob Diamond, Britain’s highest paid bank boss. The Barclays chief executive is facing growing pressure to resign after it emerged that his staff made millions by fixing the interbank lending rate Libor.
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.’
Time for action: Barclays PLC President Bob Diamond has 'questions to answer' according to Prime Minister David Cameron
Bank of England Governor Sir Mervyn King admitted ‘something went very wrong’ in the finance industry, criticising ‘excessive’ salaries and bonuses, ‘shoddy’ treatment of customers and ‘deceitful’ manipulation.
But government sources suggested Bank officials and members of the last Government had questions to answer about whether they were aware of attempts to depress the Libor rate at the height of the financial crisis in 2008 and 2009.
There was concern ‘among all the authorities’ that if the rate rose too high, banks might be pushed into greater crisis, tipping the economy back into recession, one source said. Evidence that government or bank officials discussed pushing the rate down with bank bosses would take the scandal to new heights.
Former Archbishop of Canterbury Lord Carey, writing in today’s Daily Mail, warns that widespread alienation against banking giants risks leading to civil unrest.
Unimpressed: Governor of the Bank of England, Mervyn King has admitted 'something has gone very wrong' in the finance sector
‘Repentance implies a complete turning around and making good. As things stand, the banks have failed to demonstrate any sort of repentance,’ he says.
‘Why hasn’t there been an investigation into the banks, the regulators and the political culture which allowed banking abuses to flourish? What is needed now is a determination to open up the banking industry to a proper public inquiry.’
Mr Miliband said: ‘We definitely need an inquiry into the culture and practices of the industry.
‘What’s been revealed with Barclays is a set of practices which have appalled people across the country and we’ve got to make sure we shine a light in all the corners of the industry to find out why these practices have been going on and what it is about the culture that has enabled this to happen.
‘It’s pretty clear the change that is required at Barclays. I think it’s very hard to see that being led by Bob Diamond.’
The Labour leader argues that while most people in the City are honest and hardworking, a minority appears to be in the grip of ‘institutionalised corruption’.
As well as drawing up plans for a professional standards body and code of conduct, he said the inquiry should examine unregulated areas of the finance industry.
Mr Cameron said: ‘People are rightly angry about the behaviour of the banks and so am I. People want to see real accountability for what has happened. When people have broken the rules they should face the consequences.’
Chris Leslie, a Labour Treasury spokesman, said: ‘We need to know how many employees were complicit in this process, how many will be losing their jobs as a result, and whether this needs to now go beyond the regulators and into a criminal investigation.’
Lord Adair Turner, chairman of the Financial Services Authority, the City watchdog, said the fixing of the crucial Libor i nterest rate showed ‘a degree of cynicism and greed that is shocking’.
Former Conservative shadow home secretary David Davis said: ‘I have no doubt that we have need for a proper inquiry.
‘It has got to have proper investigative powers â€" all the things that Lord Leveson’s inquiry has in terms of rights to access papers and hear evidence on oath â€" but it will also probably need to work with specialist City police.’
Former Tory Chancellor Lord Lamont said the revelations of what had gone on at Britain’s banks were ‘deeply shocking and deeply damaging to capitalism, free enterprise and the reputation of the City’. ‘There certainly needs to be an inquiry into what went wrong at the banks,’ he added.
Next week, the Treasury is expected to set out more details of plans for criminal sanctions for erring bank bosses.
Downing Street sources said a public inquiry ‘was not being ruled out’.
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now your talking rip toff
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self policing doesnt work and any interest rate fixing must result in prison time, surely its no diffferent to insider trading.
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Once again I must ask - why isn't the Bank of England,, well, a bank?
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Surely we have better targets like the elderly, sick, disabled and jobless ? (Irony)
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Just lock 'em all up and throw away the key.
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Weren't Blair and Brown responsible for de regulating the banks? ...... and wasn't Balls and a Milliboy there too? They and the CEO's of banks guilty of miss selling, interest rate fixing and miss management (RBS's latest fiasco) should be answering questions in court...... let alone big salaries...... They are all immoral and taking salaries under false pretences......
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There is banking which is the taking in of money from customers and lending it out to other customers, which is strictly overseen by the Bank of England in the Uk and the Federal Reserve in the US. The activities of trading securities, selling insurance and a range of financial advisory services were excluded from banking under the Glass Steagal Act in the US which was introduced after thecollapse of the banking system in the 20s and similar provisions were in palce in the UK and other countries until the 90s when they were repealed and the Investment houses became banks. These trading organisations are nothing more than Capital Casinos trading all sorts of paper in billions of dollars everyday and taking in investor's and the original depositor's money to play the markets. There are no rules ,ethics or morals in this business and management is feeding of the trades and applies little or no controls. This must be stopped and banks returned to their traditional roles.
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Cameron cant jail his boss's . They wont allow it. Welcome to the latest show. Get a ringside seat the clowns are about to come on.
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These scams will NEVER change until a few banksters are in jail.
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if diamond says hes not going what can anyone do its aPRIVATE BANK and he dont give a sh --- about public opinion,and dave knows this.,just like the vickers report,none of the banks took any notice because they knew that their plitical buddies in government would cover their ar---,and the same will happen in this case they made biilons and paid out millions in fines to themselves,they win every time
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