Cameron Calls Inquiry into the Banks

The Prime Minister has called a parliamentary inquiry into the Barclays’ LIBOR scandal, it will be able to question people under oath and call in politicians, bankers and other groups of people. Labour has disagreed with this move, when speaking in the House of Commons yesterday Ed Miliband said “We will continue to argue for a full and open inquiry, independent of bankers and independent of politicians.” Unlike David Cameron, Miliband and the Labour party want a Leveson-style inquiry into the whole of the banking sector.

The inquiry would be chaired by a judge and would be completely independent of parliament. It would not only look into the LIBOR scandal at Barclays but would look at the ethics and culture of the whole City of London. It would question big names from all banks as well as politicians and investors.

Confidence in the banking sector has reached record lows, having never really recovered from the dent to its reputation brought by the financial crash. Worse still for the sector is its reputation will only go down, the LIBOR scandal will almost certainly spread to other banks such as RBS.

Yesterday Osborne also announced in parliament that the fines brought on Barclays would go towards the public purse instead of into regulating the City. There is also huge pressure on the British investigators to levy higher fines on any other banks implicated in the LIBOR scandal. Many people believe that the fine levelled on Barclays by City regulators was simply too small, you have to remember that Barclays could easily claw that back in a few days trading.

                                          

The way forward for the banking sector is unclear, but I do believe it will have to involve tighter regulations. After all, lose regulations were what caused the financial crash, and loosening them won’t solve it.