British leader of the Opposition Ed Miliband has called for a full judicial inquiry into banking standards and practices. He claims that it is necessary in order to restore public confidence in the banking industry. But would it?
Any public inquiry into the banking industry would inevitably be closely followed by the news media. There would be daily coverage of the proceedings and the media attention would last for months. As such an inquiry heard the testimony of senior bankers, regulators and politicians, a particular picture of the banking industry would emerge. The picture would be anything but flattering. It certainly would not inspire confidence.
The public would learn how senior bankers have only the vaguest understanding of how the organisations they are nominally in control of actually operate. The public would discover that complex mathematical models are used to make investment decisions. They would learn that senior bankers cannot explain how derivatives actually work. They would hear about financial products that have been sold to customers, which were of no benefit to those customers, but were very lucrative to the banks. The public might well even hear evidence of how the banking system has been involved in laundering drug cartel money. Such scandalous disclosures would be broadcast by prime time television.
The image that would emerge of the regulators would also be less than confidence inspiring. The public would learn how regulators had themselves colluded in the malpractices of the bankers.
During the proceedings of such an inquiry, the public would learn how politicians deliberately, at the behest of senior bankers, denuded the regulatory system, enabling banks to engage in more and more risky, but highly profitable investments. The public would see former British ministers such as Gordon Brown attempting to justify his famous "light touch" regulation, which even the regulators blamed for the collapse of the Royal Bank of Scotland (RBS), which had to be rescued at considerable expense by the taxpayers. The people would be treated to the spectacle of former prime minister Tony Blair doubtless glibly explaining what services he actually provides JP Morgan to justify the £2.5 million a year part time job he took up on leaving office.
Doubtless, during in such an inquiry, counsel would seek to discover what happened to the £1.2 trillion that the United Kingdom taxpayers put into the banking sector in order to save it from collapse. However, a satisfactory answer from either the bankers or the politicians would be most unlikely.
A full, public inquiry into the recent history and practices of banking would reveal a picture of the finance sector that was driven by the pursuit of profit to the exclusion of all else. It would reveal a financial services sector that was out of control. It would show collusion between the financial and political elites, at the expense of the taxpayers and the real economy. The notion that such an inquiry would restore public confidence in the banking sector is simply not credible. It defies credulity to think that Ed Miliband seriously believes such an inquiry would restore confidence.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com