Stop the rot
He certainly didn't hold back. 'They are rotten to the core' was how Britain's secretary of state for business described 'institutions like Barclays Capital' in an interview last week.
The bank had just been fined GBP290million (HK$3.5billion) for falsifying its submissions on Libor, the London interbank offered rate, one of the core interest rates used around the world. More shocking was the discovery that Barclays was not the only bank which has been found acting fraudulently. At least a dozen other banks are implicated. Nor was it just trying to manipulate Britain's key interest rate. It had also been trying to fiddle the markets dealing in interest rates for the euro and yen, too. And nor was this a one-off event. The market manipulation had been going on for years.
Despite the heavy fine, Barclays' woes are far from over. It now faces a huge number of civil cases, in the US, Europe and elsewhere, which are likely to cost it millions more. Along with many other banks, it is also now being investigated for mis-selling a range of financial products too, including complex hedge instruments to small British businesses, a number of which were forced into bankruptcy.
Importantly, Barclays has not blamed a few rogue traders for its woes. It was a failing of the bank as a whole, its chief executive said.
It is easy to dismiss this story as just another banking scandal. Yet this would be mistaken.
As Britain's business secretary so eloquently put it, there is something really 'rotten' in our banking system, something putrid and unhealthy. There are too many of these scandals, too many banks involved, too many fake apologies and too many hefty compensation payments, reluctantly given.
Bankers acting fraudulently need to be brought to justice. They need to face criminal charges, not civil ones, and put in jail. They are guilty of manipulating markets, creating financial bubbles for their own gain and of selling products, which have driven millions of people around the world into penury. That deserves more than a voluntarily forgone bonus or a change at top management.
More than that, we need to ask ourselves deeper questions about what our banks are for and about how we want to control them.
Too many banks are making too much of what economists call 'unearned income'. They make profits not by working hard and contributing to our societies, but by fiddling markets, defrauding customers and gambling. According to classical economics, 'unearned income' is undeserved because it has not come from productive activity. It should not exist - and so should be 100per cent taxed. This is meant to put a stop to it, or at least ensure that any undeserved earnings are used for the benefit of us all.
We also need to ask what our banks are for. Are they businesses like any other, that should be allowed to operate and compete according to rules of the free market? Or should banks have a different role? Because they provide the oil for our economic machine, in the form of money, should they be forced into a supporting role - and no more? Should they be pillars of the economy and tightly restricted to that role?
The Barclays scandal and the 'rotten' culture that lies at the core of the system is not an isolated, British problem. It is a global one. The same sorts of scandals have floated to the surface in many other economies, including Hong Kong, where there have been many cases of insider trading and product mis-selling, too.
What is happening in Britain, and what is happening to Barclays have important implications for Hong Kong.
If the world is to weed out the 'spivs and gamblers' who inhabit a shockingly large part of the world finance industry, Hong Kong's regulators will need to play their part. If not, if Hong Kong chooses the path of least regulation as it has in the past, it risks become the banking equivalent of perdition - a land of snakes and self-destruction.
Around the world, we need radical change. We need to stop listing to the banking lobbyists, to the greedy calling for even less regulation, and do what is right for our societies. We need to control the finance sector properly and stop pussy-footing around. We need to ensure that our markets are answerable to us, to our societies, and not the other way around. We need the banks to play a responsible role, not act as gambling houses for the benefit of a few. We need them to promote healthy economic development.
'Unearned income' needs to be eradicated, despite the drop in Ferrari and yacht sales this will entail. And Hong Kong will need to play its part.
Graeme Maxton is an author and economist