U.S. Federal Reserve Chairman Ben Bernanke testifies before the Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill in Washington July 17, 2012. REUTERS/Yuri Gripas
London—As lies go, none is greater than the one that suggests banks are capable of “self-regulation.”
Given authority over their own affairs, through fantasies such as “self-reporting,” CEOs, CFOs and COOs who travel in limousines, wear very expensive suits and give to all the right charities will do what comes naturally to them: lie.
Indeed, they will engage in practices so deceitful that, the governor of the Bank of England, Sir Mervyn King, says they “meet my definition of fraud.”
King’s level of bluntness with regard to the scandalous behavior of international bankers has yet to enter into the mainstream discourse of the United States, where most politicians (with notable exceptions such as former New York Attorney General and Governor Eliot Spitzer and Congressman Dennis Kucinich) remain determined to do the bidding of their Wall Street paymasters—and where most media can’t be bothered to cover stories about the costs these cozy relationships impose of society.
But the conversation about crooked banks and lying CEOs is getting more interesting in Britain—so much more interesting that it is all but certain to have an impact on the United States. Why sort of impact? Hopefully, it will be a recognition that the so-called bank reforms of 2010 were, as former Senator Russ Feingold, Congresswoman Marcy Kaptur and others suggested, dramatically insufficient.
The biggest story of recent weeks in London is that of a banking scandal so extreme and so sweeping as to confirm that, when afforded a free hand, the most powerful bankers in the world will create self-serving structures that distort and ultimately undermine free markets. Indeed, argues The Economist magazine, lies by international banksters have put “banking in crisis.”
Teddy Roosevelt was right when he argued that strict regulation was needed to prevent the bad players of the private sector from creating monopolies so over-arching that they could destroy not just competition but—through their exercise of political and media power — democracy itself.
Roosevelt’s observations take on a new urgency with each news report from Britain, a country that has been shocked into something akin to consciousness by the revelation that some of the biggest banks in London (and the world) had—when given leeway to manage information critical to the functioning of financial markets—cheated. They filed false information to, in the words of London’s Independent newspaper “help mask losses and help improve their own financial positions.”