Rather late to today’s banker bashing frenzy, beaten to it by both Boris Johnson and Ed Miliband – united in calling for imprisonment of those guilty of manipulating the Libor interest rate in Barclays and other banks – and by the Prime Minister, George Osborne finally bounded out from behind his junior punchbags and addressed the Commons on the City’s freshest scandal.
He spoke authoritatively of the changes the coalition will bring in to fix the “systemic failures” revealed by Barclays bankers’ wilful transgressions, and in light of the FSA’s investigation report, which he dramatically labelled an “epitaph to the age of irresponsibility.”
The coalition will abolish the whole tripartite regulatory system of the previous government, to be replaced with a “new, far tougher regulatory system,” updating the Financial Services Bill, and will establish a “new Conduct Authority” with “razor-like focus” on market abuse.
Although all worthy proposals, Osborne was rather limp on the pivotal populist point: punishment of those responsible. He skirted the issue of imprisoning bankers: “I cannot comment today on possible criminal investigations for individuals involved in this activity,” letting Miliband’s earlier call for “criminal prosecutions” overshadow his rather rhetorically dry solutions.
Although he was most likely relishing the opportunity to redeem himself after another embarrassing budget u-turn this week, speaking with gusto and asking the opposition for “silence” and “perhaps an apology” in a wicked aside, his indictment of the City’s culture and malpractice was unfortunately obscured by political point-scoring.
Twice he emphasised that the FSA’s report into the scandal found the worst abuses occurred in the build-up to the financial crisis, under Labour, calling the report “a shocking indictment of culture at banks like Barclays in the run up to financial crisis.” He then harangued the opposition benches about Ed Balls’ absence, noting that “he was there every single day while these abuses were taking place.”
While much blame can be placed on Labour’s regulatory system for both the banking crisis and abuses that are regularly unfolding before the eyes of an incredulous public, the chancellor's focus today should have remained on the reputation of the City being “at stake” - as put to him by shadow chief secretary to the Treasury Rachel Reeves - and a culture change, something that all parties agree to be critical.
Osborne had a chance to emerge this week as a competent and caring politician, with the opportunity to engage in some good old-fashioned, and indeed highly justified, banker bashing, but instead risked alienating the public by predictable Labour-hounding and ambivalence over the matter of punishing bankers.