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Commentary 354 – July 2012
09 July 2012 (11:21:48)

TIME FOR TOUGH BANK REGULATION

The revelations about Barclays, and maybe other banks, rigging the inter-bank lending rate ought to be something that unites social and economic liberals in disgust.

Social liberals, obviously, because they want the banks more closely regulated in an attempt to avoid a repeat of 2008.

But also economic liberals, since the sort of cheating, possibly even criminal, behaviour that was becoming public as Liberator went to press is surely an offence against the free operation of markets.

Not even the most extreme supporters of free markets usually argue in favour of unrestrained criminality, and something very like that appeared to have been going in some major banks as they sought to manipulate interest rates for the whole economy to their improper advantage.

Labour, in thrall to high finance, dependent on taxing its proceeds and intensely relaxed about those who got filthy rich, caused much of the problem in the first place by imposing light-touch regulation that became ever lighter.

The Conservatives, though not directly responsible for the ethical sewer that the banking industry became in the mid-2000s, bear the blame for setting up the whole thing in the first place with the 1986 ‘Big Bang’ and for pressing Labour to regulate less.

Vince Cable was one of the few to warn over the perils of slack regulation, as he did over much else, before the 2008 crash. But while the Liberal Democrats had no real influence over the situation then, they were hardly loud in calling for tougher regulation of financial institutions.

The party went along with the prevailing consensus – if less enthusiastically than others – with its economic liberal wing maintaining a boneheaded opposition to the regulation of anything much in the economy. We now know where ‘light touch’ regulation leads.

To an extent, it is understandable that the Liberal Democrats went along with this, because there was such a strong consensus across the political, business and academic establishments that light-touch regulation would keep the golden eggs laying.

But now the party should be able to exploit its comparative innocence in the matter to lead calls for tougher regulation and to use its influence in the coalition to bring it about, in particular by splitting retail from casino banks.

Labour can hardly call for the regulation it so signally failed to implement. And since the Conservatives are at heart still the party of greed and selfishness, they will never want to regulate financial bodies properly unless forced to by public opinion.

Here surely is a chance for the Liberal Democrats to restore some of their credibility and distinctiveness by being on the same side as public outrage.

LET’S SEE THE EVIDENCE

The saga of whether Liberal Democrat conference goers should be subject to police accreditation has this year descended into farce.

To cut a long story short, last year conference voted to instruct the Federal Conference Committee to devise security arrangements “which protect the privacy of members’ personal data and which respect the party’s constitution and internal democracy”.

Instead the same procedures will be in place as those that caused last year’s row about privacy and the principle of the police deciding who should attend.

The decision has, in flagrant disregard of last year’s motion, been batted between FCC and the secretive Federal Finance and Administration Committee, with the latter taking a decision to retain police accreditation on the basis of the party otherwise faced with some unspecified financial risk.

Since FFAC has refused to say from where this risk emanates, or to quantify it, it is hardly surprising that it stands accused of cowardice and bad faith in yet again giving into police bullying.

In this issue of Liberator, we have attempted to shed a little light on this (see Radical Bulletin), and David Grace – the mover of last year’s motion on accreditation – sets out eloquently the case against.

But if a conference motion is going to be ignored, party members should not be left to find out why and how this happened by relying on Liberator’s modest investigative resources.

Nor should opponents of police accreditation be traduced by being told that they are heedless of the safety of venue staff. Nobody objects to airport-style security searches and it is hard to see what danger any accredited person could pose once they had gone through that thorough security.

After last year, it should have been evident even to FFAC that it was dealing with a political hot potato that required careful handling and clear explanation, were it to have any chance of convincing party members to accept its decision.

Instead, it has responded with evasions, abusive denigration of its opponents, the conjuring up of unspecified threats, and unsupported assertions of threats to the party’s finances.

If any of the reasons cited by FFAC for ignoring last year’s motion are true, let it have the courage to share its evidence with the party.

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