Regular readers know that the only way to change bank behavior for the better is to require transparency. Specifically, transparency under which the banks disclose the current global asset, liability and off-balance sheet exposure details.
Because sunlight is the best disinfectant. With exposure detail transparency, sunlight is shown on the banks and all of their activities.
Gone are the days of misleading or politically bullying their regulators as market participants can use this data to independently assess what banks are doing. Based on this independent assessment, market participants can exert market discipline on the banks; something that has been absent for the last 40 years.
Zoe Williams nicely summarizes the bad behavior of the banking sector and why transparency is needed in her Guardian column.
Putting aside the people who just can't bear for this to be true, it is plain to everyone that the main high street banks are morally bankrupt. If only we could have bailed them out morally instead of financially – I feel sure our moral deficit would have been easier to pay down.
Two scandals hit Barclays this week within 24 hours of each other – in one it is contesting a £50m fine for reckless Qatari fundraising that it hadn't told its shareholders about. In the other, it may have to repay £100m for mistakes (in its favour) made in personal loans.
This doesn't tell us much we didn't already know.
We knew from Liborand the mis-selling of personal protection insurance that cheating people has become peer-normalised among the main banks, and we know this has been going on since at least 2005.
There has been a moral deficit since then, and the crash didn't make a dent in it.
We also know, from those epic fines issued by the Financial Services Authority (now the FCA) over Libor, that much of the punishment is as good as meaningless. Money was just taken from one bank and distributed among the others. This only works if just one of them is crooked. When they all are, it's just a kitty....
We spend so much time talking about this titanic clash between the free market and the social state – yet ignore the fact that most of our major "markets" no longer operate as such.
This is an oligarchy whose only governing authority is the administrator of wrist-slaps, and whose principles begin and end with the preservation of its jointly and severally managed profit.
Which is to say that they're not competing against each other; they collaborate brilliantly – which would be sweet to watch were it not for the fact that they are working together the better to screw us.
When you criticise a bank, you are often accused of the crime of "minding profit". I don't mind profit. But the system as it stands has come untethered from all the principles by which profit justifies itself.
Buyers and sellers are only equal parties working towards mutually beneficial deals when both have all the relevant information.
Generally we have no information and discover what the banks are up to roughly six years later, if at all....
[RBS] has all the garden variety failures that affect me personally as a customer – you can check them on a scorecard produced by Move Your Money – as well as occupying the hot epicentre of an FT diagram which details the causes of the 2008 financial crash.
That was a complicated disaster, caused by bad lending, bad investments, risky funding structures, low capital, and mergers and acquisitions. RBS alone had a finger in every pie chart (it is actually a Venn diagram).
So this institution is at the very heart of an event that has caused misery for millions of people, not to mention lobotomised our political culture...