On the 6th of July 2012 the UK Serious Fraud Office opened an investigation into the manipulation of the London Interbank Offered Rate (LIBOR) by up to 20 banks, most notably Barclays. The LIBOR is the interest rate set by major London banks that underpins over £220 trillion in derivatives in both the UK and US. The result of this manipulation is artificially high interest rates on mortgages, student loans and other financial products that working-class people pay from their wages each month.
Barclays was fined a total of £270 million for the manipulation of rates in the UK, US and Europe from as early as 2005. During the financial crisis, they cynically manipulated rates to make their bank seem healthier. Barclays’ Chairman Marcus Aguis and Chief Executive Bob Diamond were forced to resign over the scandal. Diamond went on to implicate the Deputy Governor of the Bank of England, Paul Tucker.
This paltry attempt by government to be seen to regulate and control big banks was, as one MP on the committee admitted, “useless”. Instead of racketeers like Diamond being jailed, he’ll receive a multi-million pay off. This – along with the phone hacking scandal – is part of what the Guardian described as the “long-term decline” of British democracy.
The Financial Services Authority (FSA) Chairman said that quotes like “I’m opening a bottle of Bollinger so we can celebrate fixing the Libor rate” “reveal a … culture of cynical greed”. This culture of cynical greed, however, is engrained in the capitalist system. Cynical and greedy capitalists are rewarded by government policies like the proposed corporation tax cut for Northern Ireland and the billions of pounds handed over to the banks as bailouts when their dodgy deals went bad.
For the banksters, “self-regulation” means no regulation. They use the financial markets to line their own pockets with billions of pounds while working-class people struggle to get by on poverty wages and benefits. It’s no coincidence that the super-rich are getting richer while ordinary people are getting poorer despite repeated, multi-million pound cash injections into the banks. The “trickle down” economy is a myth.
Some banks have been part-nationalised so that their debts are taken onto the shoulders of the taxpayer, yet they continue to refuse to lend to workers and small businesses. The Socialist Party demands that the entire financial sector is fully nationalised – with compensation paid to shareholders only on the basis of proven need – and run democratically. This would wipe out bonus culture and reckless short-term profiteering. Instead, the banks would become institutions to direct investment into the real economy, in order to provide jobs and growth.
Our local politicians have shown yet again that they care more about lining their own pockets than fighting for the working-class people they are meant to represent. They have just put through a package giving them an 11% pay rise – almost £5,000 a year ! – bringing their salary to £48,000. Chairs of committees will get £60,000, Ministers £86,000 and the First and Deputy First Ministers get £120,000!
