Bankers

[Driller]

It always amuses me how the term "conflict of interests" is never considered in the way the banking sector is made up. I mean the whole principle is laughable-those that hold all the money get to muck around with it.

Of course there's going to be loads of irregularities, you're average Joe can't resist can he?

High court Judge Joe who also happens to own a large private prison

[Murph7355]

Countdown said:

If a law is broken and the criminal punished (or in this case "fined") it doesn't mean the law, or the police,are wrong. What we do need to do is punish the criminally sufficiently to deter him from doing it again.

I think we're agreeing.

crankedup seemed to be suggesting that the current regulations need to go. I suggested that it may not be the regulations themselves that are out of whack. ie perhaps there's nothing wrong with the "law" at all, so why get rid (other than being blinded by rhetoric).

Though I think in this particular case, and others in the whole banking debate, the "police" definitely need to look in the mirror.

Maybe it's also possible that the fine and non-media driven consequences were actually justified. There's a lot of baying for blood constantly, but perhaps the fine actually covered the detail of the crime sufficiently? Detail that perhaps your average DM reader simply wouldn't understand and that your average news editor wouldn't run as his readership wouldn't salivate as much.

It will be interesting to see how "trial by media" pans out. It's bankers right now (helped in no small amount by politicians latching on to prevent them being the focus!). But the industry chosen will change in time. Those joining in the ugly baying need to hope the spotlight doesn't turn on them...

[Blackpuddin]

http://www.telegraph.co.uk/news/uknews/9362806/Ban...

[Murph7355]

Blackpuddin said:

http://www.telegraph.co.uk/news/uknews/9362806/Ban...

Yup, taxpayers' money went straight into property in Notting Hill.

Not back to the taxpayer (with interest) at all.

I hope he has a generally better grip on reality than that little soundbite or his mgmt consultancy might struggle...

Still, I bet his metal shed in Anglia is thoroughly exciting for him. Idiot.

[crankedup]

turbobloke said:

crankedup said:

munky said:

speedy_thrills said:

It doesn't matter if he knew or not, it's his job to know.

1) Logistically, how is he supposed to know what 146,000 people are doing?
2) How is he supposed to know what someone is doing, when they are covering it up with the aim of the boss not finding out?

fail-safe management structure

No such thing. Humans are involved.

Rubbish, staff manipulating numbers through computers is what is involved. By your standards no wonder the banks have been running like the wild west.

[RacerMDR]

crankedup said:

turbobloke said:

crankedup said:

munky said:

speedy_thrills said:

It doesn't matter if he knew or not, it's his job to know.

1) Logistically, how is he supposed to know what 146,000 people are doing?
2) How is he supposed to know what someone is doing, when they are covering it up with the aim of the boss not finding out?

fail-safe management structure

No such thing. Humans are involved.

Rubbish, staff manipulating numbers through computers is what is involved. By your standards no wonder the banks have been running like the wild west.

This is unrealisic....

I have been in charge of teams for years.......and a lot smaller than 146000 people I don't mind telling you.

It is IMPOSSIBLE to know what each and every team member is doing. We build systems to do the absolute we the best we can to avoid fraudlent behaviour, but in reality - if someone wants to, they will usually find a way around it.

Sometimes they are caught, sometimes they are not caught.

Do you think the Home Secretary or Head of the Police know what every, single copper is doing? Should he be sacked every time we find a dodgy one?

No, of course not......it would be ridiculous.

As long as reasonable steps are taken, and due diligence is followed as recommended by the regulators......that is the best we can do.

All of this jumping up and down about the banks still smells like jealously of successful people in the main part. (Not necessarily on here, but JoE public and the press)

[crankedup]

Murph7355 said:

crankedup said:

If any other person(s) hold the same POV as myself its called agreement!...

Indeed. But it's amusing that you slam them when their opinions aren't the same as yours (which seems to be often), but laud them when they are.

crankedup said:

Splitting the retail from investment arms of banks is great news, I have always been in favour of that....

What do you perceive the benefit to be, and precisely how do you envisage that benefit coming about? And what of the downsides?

crankedup said:

Keeping the same regulations after the split, I don't think so...

Are you familiar with the detail of banking regulations? Do you think they are all unfit? Do you feel that everyone responsible for setting the regulations over the years is less technically competent at setting them than you or Vince Cable?

Or could it be that the mgmt structures the regulator has in place aren't fit for purpose...;)

You see it as amusing when I agree with politicians on some of their statements, and then I may slam them for other statements. I find your argument strategy somewhat warped, even all three main parties are in agreement on banking scandal. Why on earth would I not support an expression in which I am in agreement, no matter what colour tie. It suggests I agree with a particular principal but not perhaps the overall political agenda.

Splitting the retail and Investment arms of banks will be helpful in the process of re-constructing public confidence. It will ensure that should an investment bank get itself into trouble it will be standing alone, certainly tax payers will have no need/wish/requirement to bail them out again. The retail side will stand alone dealing with its retail customers on SME loans, personal loans, mortgages, small savers accounts and other traditional high street bank activities.

Obviously the forthcoming new banking regulations will bolster the old regulations, the baby will not be thrown out with the bath water or the wheel be re-invented. However, identifying the poor shoddy services, wrong doings, extreme remunerations to employees, mis-selling activities and no doubt a host of other undesirable financial activities will all be considered within new regulations that will curb such activities in the future or result in penalties.

The FSA have, to an extent, failed in their task. New reg's and a beefed up supervisory body is required. How can the public's confidence be restored by any other method.

All I will suggest is that any reforms to the banking industry are long over due. Bankers need to take a note to themselves, the party is over, leave the lights on when you leave.

[Blackpuddin]

Can I posit the theory that the Barclays bosses knew perfectly well what was going on but were happy to take a 'plausible deniability' position on it because (a) it was a scheme designed to make money, (b) every other bank was doing it too, and (c) that way they had a chance of keeping their jobs when it all came out in the wash. Doesn't take a genius to work it out.

[anonymous-user]

crankedup said:

You see it as amusing when I agree with politicians on some of their statements, and then I may slam them for other statements. I find your argument strategy somewhat warped, even all three main parties are in agreement on banking scandal. Why on earth would I not support an expression in which I am in agreement, no matter what colour tie. It suggests I agree with a particular principal but not perhaps the overall political agenda.

Splitting the retail and Investment arms of banks will be helpful in the process of re-constructing public confidence. It will ensure that should an investment bank get itself into trouble it will be standing alone, certainly tax payers will have no need/wish/requirement to bail them out again. The retail side will stand alone dealing with its retail customers on SME loans, personal loans, mortgages, small savers accounts and other traditional high street bank activities.

Obviously the forthcoming new banking regulations will bolster the old regulations, the baby will not be thrown out with the bath water or the wheel be re-invented. However, identifying the poor shoddy services, wrong doings, extreme remunerations to employees, mis-selling activities and no doubt a host of other undesirable financial activities will all be considered within new regulations that will curb such activities in the future or result in penalties.

The FSA have, to an extent, failed in their task. New reg's and a beefed up supervisory body is required. How can the public's confidence be restored by any other method.

All I will suggest is that any reforms to the banking industry are long over due. Bankers need to take a note to themselves, the party is over, leave the lights on when you leave.

Not sure how splitting of the banks will restore confidence, I hope you haven't forgotten Northern Rock, Alliance and Leicester, and Bradford and Bingley, who were all retail/savings/mortgage type banks that failed (or in the case of A&L bought out before they could fail).

Id also like to know how you feel the FSA failed in their task? Barclays own internal compliance dept were not monitoring or checking their LIBOR submissions as their own internal risk review did not see manipulation as high risk. None of the rate submitting staff received compliance training or advice. That is a failing of the systems and controls within the bank, not of the FSA regulations. Aside from having a team of people monitoring in real time every single trader communication, you will not stop market abuse activity taking place if an individual or group collude to do this.

Simply applying more and more regulation is pointless if the banks themselves do not implement policies to make the regulation effective.

[munky]

Blackpuddin said:

Can I posit the theory that the Barclays bosses knew perfectly well what was going on but were happy to take a 'plausible deniability' position on it because (a) it was a scheme designed to make money,

actually the second occurrence, as per the FSA report, most certainly was not. I take it therefore you didn't read it,

Blackpuddin said:

(b) every other bank was doing it too,

incorrect, there are 241 foreign banks in London plus the UK ones, yet only 6 are alleged to have anything to do with this, of which 3 are not British by the way

Blackpuddin said:

Doesn't take a genius to work it out.

Well you failed to work it out, need we say anymore?

[crankedup]

Murph7355 said:

Countdown said:

If a law is broken and the criminal punished (or in this case "fined") it doesn't mean the law, or the police,are wrong. What we do need to do is punish the criminally sufficiently to deter him from doing it again.

I think we're agreeing.

crankedup seemed to be suggesting that the current regulations need to go. I suggested that it may not be the regulations themselves that are out of whack. ie perhaps there's nothing wrong with the "law" at all, so why get rid (other than being blinded by rhetoric).

Though I think in this particular case, and others in the whole banking debate, the "police" definitely need to look in the mirror.

Maybe it's also possible that the fine and non-media driven consequences were actually justified. There's a lot of baying for blood constantly, but perhaps the fine actually covered the detail of the crime sufficiently? Detail that perhaps your average DM reader simply wouldn't understand and that your average news editor wouldn't run as his readership wouldn't salivate as much.

It will be interesting to see how "trial by media" pans out. It's bankers right now (helped in no small amount by politicians latching on to prevent them being the focus!). But the industry chosen will change in time. Those joining in the ugly baying need to hope the spotlight doesn't turn on them...

The new regulations are required to beef up existing or replace whichever is deemed most appropriate. I have always said the FSA needs replacing or beefing up. You are using my name and suggesting matters that are not associated with me. Please refrain or ensure accuracy.

Incidentally, its not just the bankers in focus at the moment, we also have the inquiry ongoing into phone hacking.

[crankedup]

RacerMDR said:

crankedup said:

turbobloke said:

crankedup said:

munky said:

speedy_thrills said:

It doesn't matter if he knew or not, it's his job to know.

1) Logistically, how is he supposed to know what 146,000 people are doing?
2) How is he supposed to know what someone is doing, when they are covering it up with the aim of the boss not finding out?

fail-safe management structure

No such thing. Humans are involved.

Rubbish, staff manipulating numbers through computers is what is involved. By your standards no wonder the banks have been running like the wild west.

This is unrealisic....

I have been in charge of teams for years.......and a lot smaller than 146000 people I don't mind telling you.

It is IMPOSSIBLE to know what each and every team member is doing. We build systems to do the absolute we the best we can to avoid fraudlent behaviour, but in reality - if someone wants to, they will usually find a way around it.

Sometimes they are caught, sometimes they are not caught.

Do you think the Home Secretary or Head of the Police know what every, single copper is doing? Should he be sacked every time we find a dodgy one?

No, of course not......it would be ridiculous.

As long as reasonable steps are taken, and due diligence is followed as recommended by the regulators......that is the best we can do.

All of this jumping up and down about the banks still smells like jealously of successful people in the main part. (Not necessarily on here, but JoE public and the press)

Yes, fair call, the point is that the organisation needs to demonstrate its strategy regarding people management, if this fails to engender confidence then changes must be made. Also a matter of perception, how important to the organisation is identification of wrong doing. As the importance grows so must the level of regulation and supervision. Also penalties for those found wrong doing. In the case of Barclays I have said numerous times, it is a case of public confidence in the bank, this has been shredded. Leaving the current C.E.O. in post cannot possibly engender confidence that the bank is back on a solid foundation of good business practices.

[crankedup]

djstevec said:

crankedup said:

You see it as amusing when I agree with politicians on some of their statements, and then I may slam them for other statements. I find your argument strategy somewhat warped, even all three main parties are in agreement on banking scandal. Why on earth would I not support an expression in which I am in agreement, no matter what colour tie. It suggests I agree with a particular principal but not perhaps the overall political agenda.

Splitting the retail and Investment arms of banks will be helpful in the process of re-constructing public confidence. It will ensure that should an investment bank get itself into trouble it will be standing alone, certainly tax payers will have no need/wish/requirement to bail them out again. The retail side will stand alone dealing with its retail customers on SME loans, personal loans, mortgages, small savers accounts and other traditional high street bank activities.

Obviously the forthcoming new banking regulations will bolster the old regulations, the baby will not be thrown out with the bath water or the wheel be re-invented. However, identifying the poor shoddy services, wrong doings, extreme remunerations to employees, mis-selling activities and no doubt a host of other undesirable financial activities will all be considered within new regulations that will curb such activities in the future or result in penalties.

The FSA have, to an extent, failed in their task. New reg's and a beefed up supervisory body is required. How can the public's confidence be restored by any other method.

All I will suggest is that any reforms to the banking industry are long over due. Bankers need to take a note to themselves, the party is over, leave the lights on when you leave.

Not sure how splitting of the banks will restore confidence, I hope you haven't forgotten Northern Rock, Alliance and Leicester, and Bradford and Bingley, who were all retail/savings/mortgage type banks that failed (or in the case of A&L bought out before they could fail).

Id also like to know how you feel the FSA failed in their task? Barclays own internal compliance dept were not monitoring or checking their LIBOR submissions as their own internal risk review did not see manipulation as high risk. None of the rate submitting staff received compliance training or advice. That is a failing of the systems and controls within the bank, not of the FSA regulations. Aside from having a team of people monitoring in real time every single trader communication, you will not stop market abuse activity taking place if an individual or group collude to do this.

Simply applying more and more regulation is pointless if the banks themselves do not implement policies to make the regulation effective.

So many scandals are coming out of banks closets that its as if they have been operating on a 'do anything' basis as long as it makes profits for staff and the organisation. When I heard an FSA Officer talking about how the complexities of certain dealings are bewildering it isn't doing my confidence in the FSA any good at all.
Yes I have alluded to the FSA being beefed up along with beefed up or replacement regulations. These new regulations need to be effective and should apply to the investment and differing as required reg's to the retail sides and have the full weight of legislation behind them. Agreed, thieves exist everywhere, the only answer to the problem is the penalty, it has to be so severe as to deter wrong doing. It seems clear that business policies alone are not sufficient Ultimately each are a business, the retail side customers will have the support of the Government warrants customers money within the retail bank should it fail. That warrant should be deducted from the failed banks assets, like any other failed business the creditors paid first, in this case depositors.
Yes I well remember the failure of some high street banks, the regulations and Governments warranty should apply. Banks must be allowed to fail without affecting joe public financially, when we arrive at this point maybe the management of the banks will respond accordingly, lose the bank you lose your job.

[Blackpuddin]

munky said:

Blackpuddin said:

Can I posit the theory that the Barclays bosses knew perfectly well what was going on but were happy to take a 'plausible deniability' position on it because (a) it was a scheme designed to make money,

actually the second occurrence, as per the FSA report, most certainly was not. I take it therefore you didn't read it,

Blackpuddin said:

(b) every other bank was doing it too,

incorrect, there are 241 foreign banks in London plus the UK ones, yet only 6 are alleged to have anything to do with this, of which 3 are not British by the way

Blackpuddin said:

Doesn't take a genius to work it out.

Well you failed to work it out, need we say anymore?

Thanks, made me smile. I'll happily admit to layman status, and to not being able to compete with you on the details, but sometimes a little detachment from the details helps to bring the bigger picture into focus. Which is that there is rot at the top of the banking industry.

[anonymous-user]

Blackpuddin said:

I'll happily admit to layman status, and to not being able to compete with you on the details, but sometimes a little detachment from the details helps to bring the bigger picture into focus.

bull st. not knowing or understanding the details simply allows you to form a half arse opinion, coincidentally one that appears to fit nicely the popular view of "all banks".

[anonymous-user]

crankedup said:

So many scandals are coming out of banks closets that its as if they have been operating on a 'do anything' basis as long as it makes profits for staff and the organisation. When I heard an FSA Officer talking about how the complexities of certain dealings are bewildering it isn't doing my confidence in the FSA any good at all.
Yes I have alluded to the FSA being beefed up along with beefed up or replacement regulations. These new regulations need to be effective and should apply to the investment and differing as required reg's to the retail sides and have the full weight of legislation behind them. Agreed, thieves exist everywhere, the only answer to the problem is the penalty, it has to be so severe as to deter wrong doing. It seems clear that business policies alone are not sufficient Ultimately each are a business, the retail side customers will have the support of the Government warrants customers money within the retail bank should it fail. That warrant should be deducted from the failed banks assets, like any other failed business the creditors paid first, in this case depositors.
Yes I well remember the failure of some high street banks, the regulations and Governments warranty should apply. Banks must be allowed to fail without affecting joe public financially, when we arrive at this point maybe the management of the banks will respond accordingly, lose the bank you lose your job.

Yes I hear you saying regulation should be beefed up....but HOW?

With regard to the trader collusion from 2005-2008, how would any regulatory body be able to stop this?? Barclays non-existent internal controls is where most of this would have been captured. The FSA report was, quite rightly, harsh on the compliance function within Barclays. Regulatory bodies set the rules and the landscape for the sector, but simply cannot police it every single second, all that any regulatory body can do is act retrospectively.

Leeson managed to bring down an entire bank due to the failings of the internal controls and procedures by Barings, notwithstanding his own wrongdoing, but the controls put in place by the bank itself, simply should not allow that type of behaviour happen. Management at Barings Bank allowed Leeson to remain Head Trader while also being responsible for settling his trades, jobs usually done by two different departments. This made it much simpler for him to hide his losses. Although not a UK example, those types of failings within the bank cant be policed directly by the regulator.

The FSA already have the power to try criminal prosecutions and they have indeed done so. I would also pretty much guarantee the FSA would have had conversations with BofE and SFO long before any of this came close to making news, simply due to the implications this investigation has uncovered. Names of individuals and other banks involved have not been mentioned, so if criminal charges are brought, then there can be no issue of prejudicing a trial.

The FSA itself has suffered a "brain drain" over the last few years, mainly due to banks/hedge funds/asset manager etc, hiring FSA staff to fill their own compliance depts as the FSA required more and more intrusive oversight. The FSA simply cannot offer the types of remuneration packages the private sector can.

The upcoming split of the FSA in 2013 to the PRA and the FCA, will move the oversight of the "big" banks back to the BofE and will result in even more intrusive oversight at a prudential level.

However as I said before, imo, the failings of those high street banks and the current failing of Barclays are not due to the "universal bank" structure or the regulations as they currently stand.

[munky]

Blackpuddin said:

munky said:

Blackpuddin said:

Can I posit the theory that the Barclays bosses knew perfectly well what was going on but were happy to take a 'plausible deniability' position on it because (a) it was a scheme designed to make money,

actually the second occurrence, as per the FSA report, most certainly was not. I take it therefore you didn't read it,

Blackpuddin said:

(b) every other bank was doing it too,

incorrect, there are 241 foreign banks in London plus the UK ones, yet only 6 are alleged to have anything to do with this, of which 3 are not British by the way

Blackpuddin said:

Doesn't take a genius to work it out.

Well you failed to work it out, need we say anymore?

Thanks, made me smile. I'll happily admit to layman status, and to not being able to compete with you on the details, but sometimes a little detachment from the details helps to bring the bigger picture into focus. Which is that there is rot at the top of the banking industry.

If one person smiled, this thread achieved something at least

Seriously though, in this particular case of LIBOR, the devil is in the detail

Have a read through the FSA's 'final notice' to Barclays on the FSA website and it will make more sense. There were 2 distinct parts to what happened - one was manipulation of LIBOR for profit, but the impact was small and BD would not have known about it, he cannot personally check the work of all 146000 staff each day.
The other part would be difficult to prove as manipulation as there was no LIBOR 'market' at that time, any number submitted by any bank was a guess. Proving one guess is right and another guess is wrong could be rather interesting. The definition of LIBOR is intentionally vague; it was designed to be so. In this second part, all Barclays did was revise their guess when they realised their guess was higher than every other bank's guess. If you guess a number and the other 17 people in the room guess a different number and pretty much agree with each other, it could be a reasonable assumption to make that you are wrong and they are right..

[Murph7355]

crankedup said:

....
Yes I well remember the failure of some high street banks, the regulations and Governments warranty should apply. Banks must be allowed to fail without affecting joe public financially, when we arrive at this point maybe the management of the banks will respond accordingly, lose the bank you lose your job.

The point djstevec was making was that it was banks on the retail side that are at the root of the current "crisis" (ignoring moronic government spending policies and personal greed on Joe Public's part - which is kind of like worrying about a split nail when you have cancer). In splitting the banks, at best in the scenario outlined we'd probably have protected the loathed investment bankers more than Joe Public

If a bank fails, Joe Public will inevitably be impacted by the very nature of what banks do. Rhetoric around not letting them be impacted is just that. Rhetoric. It's like trying to cut Welfare expenditure without impacting the "poor".

Ask yourself why the then government stepped in so quickly with one of the retail side banks...

[cardigankid]

Whether deliberately or otherwise you give the impression that the problem was in the retail banks not the investment side of these banks. It may be true that across the whole of society people have overspent, often stupidly, and that government policy particularly during the Labour era was little more than an ignorant, deceitful and cynical search for largesse which they could squander on their own interest groups. But that is just the background.

It is equivalent to blaming those who took on the subprime mortgages for the credit crunch. They were probably improvident, foolish, irresponsible and many other things, but it took investment banks to identify the opportunity to convert these securities into highly rated investments and then sell them to suckers throughout the world, including RBS, then profit again by insuring themselves against the results of the inevitable crash. The people responsible should be in prison, but instead they have got away with their loot largely through state intervention to bale out the institutions whom they swindled, and they are ready to do it again.

It is access to 'retail banks' which gives their investment sides the leverage to gamble in the way they do, and it is in no one's interest but the investment bankers. Because investment and retail banks are combined, the Government has effectively no choice but to underwrite the investment bankers operations to protect the retail customers money. This is fundamentally wrong. The retail customer has fairly simple requirements the most important of which are security and efficiency. That is what they need to run their businesses. They are not looking for extraordinary rates of return or windfalls from share ownership. It is therefore essential that retail banking is thoroughly and effectively separated from investment banking. That is no doubt a little more complex than it appears, but without it we are not going to have a sound banking system and that is going to affect our ability to grow the real economy. Investment banking in Britain is now conducted on the Goldman principle of manipulating the markets to screw everyone and make personal fortunes. This greedy immoral culture which now characterises the City of London is actively encouraging our cycles of boom and bust (which are ideal for gamblers but eviscerate 'real' businesses) and is absolutely incompatible with the future trading success of Britain as a whole.

It was Northern Rock's sourcing of funds from the money markets which sunk them. it was RBS irresponsible corporate purchases and catastrophic investment bank losses which sunk them. For myself I am going to place no 'retail' money at all in any bank which has an investment arm anywhere within its organisation. If investment banks want funds they can ask for them. I have twice been approached by investment banks to place six figure sums with them. Coincidentally they were from Barclays and Goldman Sachs. In both cases their short term self interest was glaringly obvious, and in the case of the Goldman Sachs man, one of their many Vice Presidents, the man looked so like a pantomime villain it was comical. People like that would not succeed in parting people from their money in a fairground, which imho is their more natural environment, but they succeed in the City because they have political protection and a veneer of respectability to hide behind. There are good investment bankers. of course, who are truly professional and both respect and look after their customers. I haven't met a British or American one though.

Dealing with retail banks when they were sound businesses was NOT easy. They did not give money away. They reminded you that they were lending their other customers money. You had to establish trust and your own sound track record. The people who ran them were not geniusses and were not Masters of the Universe, but the were experienced and wise. They were no wealthier than most other local professionals. But they did not go suddenly and spectacularly bust. However, sound banking, and consistency of treatment over long periods of time, being able to rely on lines of credit at steady rates (unlike, I may say, dealing with Barclays in recent years) resulted in the steady growth of business. That is what is needed, anything else is self delusion.

Investment bankers in the UK do not imho have any grasp of the hatred and contempt in which they are held outside their own small circle. They are not trusted, they are not valued, and few people regard them as anything other than snake oil salesmen. The money they make is generally believed to be swindled from society at large. That they should retain the position in society they had particularly under Bliar/Brown is inconceivable. Something radical has to happen and I wonder when they are going to realise that.

Edited by cardigankid on Thursday 5th July 10:09

[RichyBoy]

This thing scares me because the media as usual are trying to pull the wool over the people's eyes. What are the legal implications of a couple of basis points on some trillion pound deals at a minimum?