Guest post. Translated from the French by Tim Gupwell
The case is clear-cut judging by the current climate! The banks are behaving like louts, the regulators supervising them are looking the other way, and the politicians are covering their backs. Indeed, it is difficult to draw up a full list of the scandals which have just come to the fore without missing some of them.
Of course there is Barclays, not to mention all the other megabanks waiting for their fate to be made known, in a context spiraling out of control, hoping to escape from public condemnation, fines and judicial pursuits. There is the virtuous BNP Paribas, prosecuted in France for complicated mortgage loans based on the parity between the Euro and the Swiss Franc. Or indeed the French-Belgian bank Dexia, with its structured loans made to local collectivities and hospitals that one no longer hears about. The British bank HSBC is a big blow, involved according to the American Senate in money laundering operations for Mexican drug-trafficking cartels, and with direct links to organized crime, including the Russian mafia. The pearl of Asia has even achieved a double whammy thanks to secret financial transactions between 2001 and 2007 with Iran – forbidden in the USA – for an amount of 16 billion Dollars.
In Germany, it is Morgan Stanley which stands accused (and its boss who has had to go), due to its involvement in a litigious sale of EDF’s stake in the company EnBW. Finally, and on a provisional basis, it would be remiss not to cite Visa, Mastercard, Bank of America, JPMorgan Chase, Citibank, Wells Fargo and Capital One: by virtue of an American law allowing them to settle out of court to avoid prosecution, they are going to pay around 7 billion dollars to put an end to accusations of making unwarranted charges in transactions. The complaint had been lodged in…….2005.
Under these conditions one can hardly talk about isolated cases and content oneself with pinning the blame on the small fry. Bob Diamond’s resignation from Barclays is a turning point, at a time when the Bank of England itself has been taken to task and its governor Sir Mervyn King has to leap to its defence.
Constituting the visible part of the financial system, the banks are no longer getting a good press, despite campaigns maintaining that they put clients’ needs first. The voice of the people can be heard replying: “to rip them off better!” This is probably one of the factors that has lead the IMF to express its concerns about the “adjustment fatigue” that the ‘budget adjustment plans’ might lead to. One can only admire the understatement, for is that really all we are talking about when we see the situation in Spain? Recent protests organized via social networks have not waited for the trade union protest on the 19th July, while the new Government measures destined to bring the regions to heel were unveiled.
These measures are the replication on a countrywide scale of the strangleholds applied so relentlessly to the Eurozone: financial aid is granted to the Spanish regions which have had to agree to extremely high interest rates on the bond market, in return for showing a clean bill of health, or in other words for respecting the obligation to drastically reduce the deficit. Knowing that the education, health and social security budgets are handled, to a very large extent, at regional level, one understands that the noose has been tightened. Spain is getting back to its ancient traditions; how long before the return of the Spanish Inquisition so cherished by Isabel the Catholic?
Not being able to obtain the consent of the victims, who are under no illusions about the fate awaiting them, they content themselves with depression and resignation. Not without a few cunning plans destined to help sweeten the pill when the margins for manoeuvre seem limited, as is the case in France. But it seems that the latest – the adoption of the ‘balanced budget rule’- does indeed require a revision of the constitution and cannot be adopted with a simple “organic law”, which had been presented as being easier to undo. The game is getting more complicated.
Yesterday, the General Rapporteur to the Socialist Party, François Marc, sketched out a solid argument: “the harmonization of government budget rules would be a good thing in principle, as long as it is within the context of a Europe-wide growth strategy”. He added, “without fiscal union in Europe, we will never get Eurobonds or the pooling of sovereign debts”. This is the bet that will be banked upon, which the representative of the left wing of the Socialist Party, the Minister of Social Economy, Benoît Hamon, has committed himself to supporting, since “growth has been placed at the heart of the European project once again”. At the same time, congratulating himself for the implementation of an “integrated supervision, a fundamental step forward which will allow us to exercise more control over the financial sector”. According to him, the European leaders have “started to draw up a road map for a union of solidarity”
Let’s hope that columnists are not required to drop their objective stance.