While being interviewed on the Today Programme this morning, Martin Wheatley proved that he was going to be no more effectual as a lead regulator than any of his spineless predecessors.
He was being quizzed about the new regime for supervising the LIBOR market (about which see below), but at the very end of the piece, he was asked whether he would like to see banksters who engage in antics such as the mis-selling of PPI insurance, prosecuted and sent to jail. His answer was that such people were made to pay the money back, but he demurred when it was pointed out that thieves in other sectors who stole money were not only required to pay it back but went to prison as well.
His answer was that the word 'thieves' was a strong term, and that in their (FCA's view) misselling was, and I quote; '...inappropriate conduct which was a long way short of fraud...'
How can we possibly have any faith in a man to regulate one of the most criminogenic markets in the world, when he manifestly demonstrates that he understands so little about the criminal law, or the public attitude towards the organised criminal cess-pit that is the UK financial sector?
This is exactly the same kind of twitchy, lily-livered, fearful attitude towards penalising city crime that has bedevilled the regulation of our financial markets in the past; and which has made the Square Mile a byword for every kind of skulduggery, thievery, fraud, money laundering, institutionalised tax evasion, and general cut-purse activity.
It is exactly this kind of pathetic approach towards financial wrong-doing that is ensuring that the American regulators do not trust us, and who are increasingly being forced back on their own resources to go after the global criminals who find such an easy home in London.
For the record, Mr Wheatley, any mis-selling activity is nothing less than institutionalised fraud at its widest scale. That is why this kind of inflated criminality had to be called 'mis-selling' in the first place because the Government just did not have the moral courage to call it by its real name, 'criminal fraud', for fear of what such a description would do the future of the London market.
When an industry sector is forced to set aside in excess of £10 billion to recompense victims of such crimes, you can hardly call this simply 'inappropriate conduct'! In these few short words, Wheatley, you sent a loud message this morning to every bankster, con-man, huckster and snake-oil salesman that under your regime, it's business as usual. You gave every single one of them a 'get out of jail card free' and none of them will have any illusions but that they are free to carry on defrauding ordinary people out of money they can ill afford to lose on some frolic dreamt up by the organised mafias and criminals who run Britain's banks.
The whole interview this morning with Wheatley was an exercise in the 'same old, same old'! It contained all the tried and trusted shibboleths, it talked about the need for new processes and procedures to help regulate the LIBOR market. It talked about the importance of the LIBOR structure and what needed to happen to make sure it was never abused again.
The interviewer repeatedly tried to get Wheatley to focus on the question of using the criminal law to bring pressure on the bad guys, and to contemplate using prison as a real deterrent.
Wheatley squirmed, he wriggled, he demurred and he obfuscated. He tried to avoid answering the questions about prison sentences. Eventually, grudgingly, he agreed that prison might be a suitable option for sentencing, but a long way after fining and banning from the industry, and then only in the cases of what he called 'extreme fraud'!
Quite what this man thinks manipulating the LIBOR market is and has been for so many years is, if it isn't extreme fraud, I am not certain. How much more extreme does it have to become? He admits that LIBOR is very important as a price setting mechanism, he admits its outcomes have impacts on many areas of financial standards, but for some reason, he is not prepared to see that this activity might fall within the area of 'extreme fraud'
Then why does he think the SFO are conducting an investigation if such activity is not extreme fraud?
He clearly does not understand that the only way to regulate a financial market in a way that the hucksters and lob-lolly men who abuse it really fear, is to make them understand that if they break the criminal law, they will be arrested, charged and tried at the Central Criminal Court.
On one issue, Wheatley is quite clear. He doesn't want to have any responsibility at all for supervising the control of the new LIBOR regime. Oh that doesn't mean he hasn't got all kinds of plans and schemes for it, lots of good bureaucratic plans are afoot. This is what Wheatley himself has said about it;
, reforming the current framework for setting and governing Libor. This will include how banks submit data, and whether actual trade data can be used to set the reference rate; the governance of Libor; and whether the setting of Libor should be brought into statutory regulation.
We will also look at alternative rate-setting processes and the financial stability consequences of a move to a new regime and, how a transition might be appropriately managed.
The area we’ll look at how we work out the best way to tackle abuse. This will consider the scope of the UK authorities’ civil and criminal sanctioning powers to deal with the type of misconduct we’ve seen. We'll also look at whether individual persons in banks with a role in Libor setting should be subject to prior approval by the regulator.
And, we’ll look at other areas where price-setting mechanisms are used in financial markets and whether we need to make policy changes. We’ll make provisional recommendations designed to inform the work on benchmark reform being considered globally..."
Well, that's alright then! Lots of good processes and procedures there to get teeth into. But who is going to oversee it all? Not the BBA that's for sure, and this is probably a good thing. The BBA in recent years has been little more than the talking shop for the various banks' interests, a lobbying group, bought and paid for by its members.
On Radio 4 this morning, Wheatly said he hoped that someone would step forward to want to oversee the new LIBOR structure. Asked why the FCA was not the right agency, and you could almost feel his anxiety to dispel that suggestion right away.
No, he said, we are regulators, not market practitioners. He wants to oversee the actions of others, but just as with his predecessors in title, he doesn't want to have any responsibility for ensuring that the new structure works properly. He will say how it should work but he doesn't want to be placed in direct charge of it.
Of course not, that way he might end up being judged on his effectiveness as a regulator and that would never do, because the public might think he wasn't up to the job if he failed in some way!
Just like the SIB and the FSA, the new FCA doesn't want to be given any responsibilities by which it can be measured by empirical standards. This is the prerogative of the whore, power, but without any responsibiity!
Listening to Wheatley this morning, I experienced the same sinking feeling that I used to experience when I heard Hector Sants telling the financial markets to be very afraid of him, or when I heard Adair Turner turning a simple explanation into three paragraphs of complex gobbledegook!
The fact is that we are back to square one again, with a regulator that has no desire to be held responsible for its actions; which cannot understand why stealing people's hard-earned money is not a crime when it is done by a bank; which has no stomach for using criminal sanctions to put errant executives behind bars; and which wants to do a lot of talking and liaising and exchanging information, and travelling to foreign conferences, but absolutely sweet fuck all about putting the bad bastards who have given the London market the cess-pit reputation it has acquired, in jail. God help us all!