Time to jail the Bankers?

I have blogged on the bankers before who I believe have ‘privatized the profits and socialized the losses’. We have paid for their mismanagement. After the 2008 financial disaster you would have thought that the bankers would have learnt.

The reality is of course few went to jail and the consequences was financial misery for many normal people losing their jobs, their house and so much more.  Of course Thomas Jefferson warned of this in a letter to John Taylor in 1816:

“And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

Of course it was Gordon Brown in the UK and President Clinton in the US who took away the restrains that kept apart the banking and casino speculation of banks that had been put in after the 1930s recession.

Only a year ago there was the Libor interest rate manipulation of the foreign exchange market by a number of the banks. Rigging the foreign exchange again who went to jail?

So the latest scandal is due to a whistle blower Herve Falciani a Swiss bank employee who steals 30,000 HSBC accounts which suggests the Swiss arm of HSBC is ‘encouraging clients to evade tax’ The tax authorities have had the details on these accounts since 2010 and yet no prosecution though Belgium, where  there is already an investigation into HSBC Switzerland  over tax fraud allegations according to the Guardian “a judge is considering issuing international arrest warrants for directors of the Swiss division of the bank.”

A number of countries are at last waking up to what has been happening even the US is considering legal action again the Guardian: “US Department of Justice is considering bringing criminal charges against HSBC and its executives as part of its investigation into whether the bank’s Swiss subsidiary helped US clients evade taxes.”

This is on the back of HSBC paying $1.9bn fine in 2012, in a “deferred prosecution agreement over money-laundering with Mexican drug cartels and breaches of US sanctions.” (Guardian).

Meanwhile normal people are being prosecuted for benefit cheating or not paying their TV license. It clearly is one rule for the rich and another for the rest of us.

The austerity measures that have been introduced across the world are the states reaction to having to bail out the banks and to their investment in the recovery packages.

HSBC may not be the one bank who is doing this so there needs to be a full international inquiry into all the banks and then a menu of options considered:

1. Break up the banks – this should have been done after the 2008 crisis. The casino parts should not in any way be part of a company that is providing banking services.
2. If breaking them up doesn’t work then banking should come under the state as a service to its citizens.
3. All people who are found out to have been tax evading should be named in public, prosecuted to the full and should not be allowed to hold office as company directors. Until a full review is done NO names should be released of people who have accounts that are in the 10,000. It is easy for people to speculate and by doing so cause considerable harm to those people concerned. All reporting should be based on facts.
4. People found to have advised on tax evasion should be prosecuted to the full and again not be allowed to serve as a company director.
5. Their personal accounts frozen and a proportion of their assets taken by the state.
6. If a politician is found to have evaded tax they should be prosecuted and if found guilty they should not be allowed to hold office
7. Banks should bared from funding political parties.

How many wake up calls do we need before the politicians actually need as Paul Mason the Channel 4 Economic Editor said after the Libor scandal:

"I’ve sat in their rooms where they’re pleading in the most genteel tones, 'don’t over regulate us, please don’t make a criminal offence possible to commit in the boardroom, don’t make it possible for us to go to jail, otherwise nobody talented will come and run these banks.' He goes on to say “What about the managers who ran this place since 2008 to 2012-2013? They walk away with what? Reputation unscathed,"

"We really deserve a better banking system because everybody on this street who doesn’t work in it is also reliant on it”

We deserve better banks and we clearly can’t trust them.

Finally well done to Iceland who Supreme Court just announced they will jail four bankers from the Kaupthing bank hopefully more prosecutions will come in the months ahead.