Jail fits perfectly for banks too big to fail

PUBLISHED : Thursday, 19 July, 2012, 12:00am
UPDATED : Thursday, 19 July, 2012, 12:00am

Many of today's bankers, it seems, are more like criminals and conmen than respectable businesspeople serving their communities honourably.

Just when you think you have heard the worst about them, they come up with even more shocking shenanigans. Given half a chance, it seems they will rip off their clients, cheat their own bosses and each other, and, in the worst cases, expose their communities and whole economies to collapse. But their lobbyists and public relations spinners are still fighting regulations in virtually all the major advanced economies.

After a year-long investigation by the US Senate, it turns out that HSBC has for years turned a blind eye to money laundering, acting routinely as a financier and conduit for clients routing funds from drug cartels in Mexico and pariah states like Iran and Syria. The US Senate report describes what it calls a 'pervasively polluted' culture at the bank.

We can be sure that HSBC is not the only global bank that is guilty of such practices. The expose follows on the heels of the Barclays scandal, to which the British bank has admitted, and for which it was fined GBP290 million (HK$3.5 billion) by UK regulators, after rigging the Libor interbank lending rate during two periods over the past decade. In the first scam from 2005 to 2007 and sporadically until 2009, the bank's traders manipulated the rates to profit their own trades. In the second scheme, dating from mid-2007 to early 2009, the bank submitted lower rates to make it appear it could borrow at a lower cost and so look healthier than it really was during the financial crisis. Other major banks have been implicated in the rigging; Barclays is merely the first to admit to doing wrong.

Trillions worth of loans and financial products are priced using Libor as a reference. Rigging it would be like financiers manipulating the Hang Seng Index to make the market look stronger or to profit from their own trades.

Remarkably, no banker has faced criminal charges - so far. People like you and me have been jailed, with the key thrown away, for far less serious offences. Have the bankers become too big to jail?