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What is it that the banking industry doesn’t understand? What is it that Barclays doesn’t understand? There are days when the news is absolutely befuddling. This is one of them.
What the FSA is Saying to Barclays
Just reading the morning headlines about Barclays ought to be confusing to UK banking customers. “Regulator warns Barclays: “We’re Still Watching You”” (Guardian); “FSA Keeps up Pressure on Barclays to Reform” (Telegraph); “Barclays Told to Keep up Pressure to Reform” (Reuters); “FSA Demands Overhaul at Barclays” (Money Marketing); “Pressure on Barclays to Reform” (City A.M.); “Welcome to Barclays, Mr. Jenkins, You’re Downgraded” (Financial News).
Then, up pops this report from Sky News: “Barclay’s Urges ‘Rogue Banker’ Ban.”
What Barclays is Saying to Parliament
It seems that Barclays (the same Barclays in all those headlines) has recommended to the Parliamentary Commission on Banking Standards that the government set up yet another watchdog over the banking industry. Aside from the absurdity of the suggestion, in and of itself, which I will explain in a moment, this unfolding scenario is like watching an alleged criminal on the witness stand suggesting to the court that it should do something about all the other criminals out there.
With all the urging for Barclays to get their house in order, they have the unmitigated gall to pose themselves as the one bank with a corner on the wisdom that it will take to end “rogue bankers.” I hope that, at least in this case, the politicians are smarter than the bankers. So far, it’s not clear.
Would You Let This Man Pilot Your Plane?
The appointment of Anthony Jenkins as CEO of Barclays was dependent upon the approval of the FSA. This is a man who has been a Barclays executive; a man whose business division had 84% of the complaints lodged against it in one six-month period upheld. But that’s okay. There were only 11,000+ complaints in that half year. Let’s put it this way: If airlines posted the number of complaints upheld against their pilots at the gates at Heathrow, would you board this man’s plane?
Granted, there may be some wisdom in promoting from within, at least in the short term, so that someone familiar with the organization takes control. On the other hand, when the organization has been plagued with scandals such as the Libor manipulation and PPI over-selling (which would have been within his purview), is Jenkins really the best man for the job?
Barclays Rogue Proposal
OK, class. What have we learned so far? A rogue bank, deeply involved in the Libor scandal, the PPI scandal, and others, has promoted one of its own, who very well could be complicit in at least some of the bank’s misadventures. Well, there’s more. The rogue bank has now suggested that Parliament establish a Chartered Institute of Bankers that would “promote and develop professional standards across the industry, and to administer a new professional register which all staff who work within certain functions are required to sign.” And, get this – the institute would be “independent of the banking industry, but be funded by the major banks.”
Independent? Are you kidding me? Have they forgotten that adage that says, “Don’t bite the hand that funds you?” Barclay’s recommendation makes it sounds like there are no banking standards now. Are they saying that registering bankers will ensure that they abide by the regulations? That is patently absurd. To be fair, the proposal also recommends that rogue bankers would be removed from the register and banned from the industry. Now there’s a good idea! Why not do it now?
May I humbly suggest that it’s not registration and more regulation that the banking industry needs. It’s accountability. There is no need to build a whole new wing of bureaucracy. The need is to institute justice and hand out punishments comparable to the banking crimes at every level and across every bank, including Barclays. The need is to reward customers for their business instead of picking their pockets.
But that’s not going to happen. That’s not the way the system works. And Barclays is proving it.
