They’re all Barclays
Depicting Barclays’ Libor-fiddling staff as uniquely corrupt overlooks what they share in common with the rest of the reckless ruling class.
What the hell is wrong with bankers? That’s the question on the lips of every commentator and politician in the wake of the Libor rate-fixing controversy. The hunt is now on to find the root cause of bankers’ aberrant behaviour, whether it’s in the nerve endings of their heads (they have greed ‘hardwired into their brains’, says one observer) or in their cushioned, value-lite upbringings (apparently they come from ‘the most privileged backgrounds in Britain’). Everyone agrees there must be some mental or lifestyle cause of bankers’ deviancy, which so shocks ‘decent Britain’.
In fact, the most striking thing about the Libor storm is not that it reveals how different bankers are from other public figures in Britain, but how similar they are, how much they have in common with everyone from the military to the National Health Service. All the obsessing over the strange language these bankers use (‘duuude’) and their un-PC levels of alcohol consumption cannot disguise the fact that their short-termism, their inability to pursue anything like a coherent interest, and their casual manipulation of the surface appearance of things with little regard for what consequences such manipulation might have, make them at one with all the organisations that make up the British ruling class today. What the hell is wrong with bankers? The same thing that’s wrong with every other institution in modern Britain.
Barclays certainly behaved irrationally, recklessly and childishly. Allegedly with the tacit approval of senior figures in the Bank of England, and maybe in Whitehall, too, they rigged the London Interbank Offered Rate (Libor) between 2005 and 2009. Libor registers the interest rate for interbank loans. It is calculated by the British Bankers’ Association, which every day asks 16 international banks to estimate what interest rate other banks might charge it for borrowing money. Barclays’ traders encouraged their Libor team to fiddle the rate, for two reasons: first for financial gain, since a higher Libor rate meant a higher interest rate for Barclays’ financial products/moneys loaned, and therefore a higher return for traders; and second as a way of painting a false picture of the bank’s health in this era of crisis, since a lower Libor rate implied that other banks were comfortable lending money to Barclays and therefore indicated that Barclays was ‘doing well’. Other banks were fiddling Libor, too.
As many have pointed out, Barclays’ behaviour has had serious repercussions. In manipulating Libor to provide what one insider described as an ‘illusion of stability’, Barclays played a part (only a part, mind) in distracting officialdom’s attention from the seriousness of the financial crisis. And in opting for the manipulation of reality in order to avoid being bailed out by the state - something it was desperate to resist - it helped to make itself, as the BBC puts it, an ‘outlier among the larger British banks’. This had a trickle-down effect across the UK: where four years ago Barclays was lending £52 billion to non-financial, non-property based businesses in Britain (27 per cent of all business loans), now it is lending just £38 billion (16 per cent of all business loans). Most strikingly, Barclays’ antics will hit the City of London hard, seriously denting its international reputation.
And yet no one at Barclays seems to have given any thought to the impact that their manipulation of reality, their singular pursuit of the goal of reputation management, would have on Britain’s national and economic interests. As The Economist says, ‘[The] Barclays staff involved had little thought for the wider ramifications of distorting Libor’. However, the explanations for why Barclays behaved this way are spectacularly unconvincing. Its antics are put down to greed, to the simple-minded avarice of its red braces-sporting traders. One commentator even uses neuroscience to explain what Barclays did, arguing that ‘the unconstrained power of bankers acts like a drug on their brains’ reward systems, creating insatiable appetites’. This shows how much neuroscience has replaced the old ideology of evil, being wheeled out to explain political phenomena by constant reference to the immorality or warping of individuals’ brains.
Others claim that Barclays’ behaviour can be explained through the idea of hormonal imbalance. Numerous commentators are obsessing over the overload of testosterone in this organisation, with one claiming that ‘high testosterone, class privilege and a lack of morals’ were the drivers of its misdeeds. Then there is the argument that it is all the fault of group chief executive Bob Diamond, now resigned, whose nationality (American) and natural disposition (greedy) apparently ruined this good old British bank. He is labelled an ‘American poster boy for avaricious bankers’ and a ‘money-obsessed Eighties throwback’, giving the impression that the problems at Barclays are a foreign, specifically Yank creation. And of course there is the return of the media class’s favourite sport – banker-bashing – where every problem in modern Britain is laid at the feet of these morally skewed characters. It is remarkable how much the moralism of banker-bashing – with its obsession with how much bankers drink, how macho they are, and who they screw, both literally and metaphorically – mirrors the moralism of the political elite’s war against the feckless poor.
The mad search for a hormonal explanation for this crisis is about avoiding offering a political explanation. The truth is that the bankers who recklessly played about with Libor are not aliens whose behaviour is at odds with the rest of polite, decent ruling Britain. On the contrary, this crisis reveals how much bankers and the rest of Britain’s ruling cliques share in common. The key dynamic at Barclays was not avarice but massive institutional incoherence and the many things that go along with that: lack of professionalism; lack of institutional loyalty; lack of historical memory; the demise of a corporate sensibility; a profound culture of short-termism; an inability to define, far less pursue, clear organisational interests. Sound familiar? Yes, these traits, these processes of decay and collapsed leadership, are rife in British institutions today, everywhere from the immature political class to the at-sea educational establishment.
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What is remarkable about the Barclays crisis is not that these bankers were obsessed with money – Stop the press: ‘Bankers in “money-mad” shock!’ – but rather that their behaviour was so unanchored, so focused on short-term gain over long-term organisational or national considerations. Such was the recklessness of Barclays’ staff that not only did they manipulate Libor in order to present an ‘illusion of stability’; they also put their antics into writing, sending emails to each other saying things like, ‘Dude. I owe you big time!’ The attempted manipulation of reality and the open discussion of it afterwards reveal the double whammy of short-termism and institutional decay at the heart of Barclays and the modern banking system more broadly.
Yet this only means that banking is in keeping with every other institution of the ruling class. From Downing Street to the defence establishment, from the health service to local councils, our governing bodies are now shot through with a culture of short-termism and reputation-preservation over any older idea of the public good, the political good, the corporate good. As we have seen in the changeability of the political class, Barclays is not the only institution that elevates the manipulation of reality over the pursuit of clearly defined goals. As we can see in the cult of whistleblowing that affects every modern institution, Barclays is not the only body experiencing institutional disloyalty and unprofessionalism. As we know from the elite’s unwillingness seriously to address various modern problems – whether it was last year’s urban riots or the intellectual emptying out of the education system – Barclays isn’t the only organisation that tries to create an ‘illusion of stability’.
Indeed, Barclays’ manipulation of Libor to create such an illusion can be seen as a metaphor for the entire political class’s role in the economic crisis. The financial economy of the past two decades was a product of political decisions more than it was the spawn of a monstrous, unrestrained market. Successive British governments catered to the needs of the banking and finance sectors, because the expansion of credit provided them with the kind of revenues that allowed them to boost public expenditure. Indeed, the current crisis is as much the product of extreme short-term political opportunism as it is a chaotic byproduct of market forces. Like Barclays, our elites manipulated reality to create an ‘illusion of stability’, and like Barclays they gave little thought to the long-term consequences – consequences all of us are now suffering.
It’s time to stop depicting bankers as creatures from another moral planet who are corrupting British values and Britain’s economic life. They aren’t a tumour on an otherwise healthy ruling class; they are a limb, an extension of today’s reckless ruling class.
Brendan O’Neill is editor of spiked. Visit his personal website here.