Tag Archives: Adair Turner


Translated from the French by Tim Gupwell

Up to now in the LIBOR affair, the witness statements before the parliamentary select committee have essentially seen everyone lying to protect their own interests. The inevitable result is a sort of cacophony, compounded by strategy changes half-way through, which was particularly the case for Bob Diamond, former Chief Executive of Barclays, who one day sought to bring down with him Paul Tucker, Vice-Governor of the Bank of England, only to attempt the following day to absolve him of any responsibility, with the catastrophic result you can easily imagine.

As for the officials, regulators and managers of the Bank of England, the performance was not much more convincing: “saving one’s ass” as one says in Shakespeare’s language, saving one’s skin (“sauver sa peau”), as one says more politely in Molière’s language.

Jerry Del Missier, Chief Operating Officer, N° 3 at Barclays until only a few days ago, chose a completely different strategy: honesty. It is difficult to say whether it was 100% sincere, but whatever it was, it was close to 90%, and probably more than that. And this strategy is, of course, far more effective due to the not entirely surprising reason that while there may be a thousand different ways of lying, there is only one way of telling the truth – which prevents one from getting too muddled up.

Obviously, the collateral damage is tremendous since in his candour, del Missier dragged absolutely everybody into it – not just the liars of recent days but also some new protagonists whose names he freely quoted, despite them having not been mentioned up to now

When he was asked, ‘if as you maintain, the orders coming from on high were encouraging you to manipulate the rates downwards, were there no alarm bells ringing at the thought that it was illegal?’, he responded ingratiatingly, ‘well…no, because effectively it was the only reasonable thing to do to save the system”.

Why have the others not adopted this approach, and consequently sacrificed tens of millions of Pounds Sterling in salaries and bonuses? Because the Golden Calf once said to the crowds kneeling before it, “Finance regulates itself, and the promised earthly paradise will only come to pass when there are no regulators or governments!”; and these tens of lost millions represent little if they are the price to pay for ensuring that their children and their childrens’ children can continue repeating the words of the Golden Calf for centuries to come.

Jerry del Missier, former C.O.O. of Barclays

Mervyn King, Governor of the Bank of England, Paul Tucker, Vice-Governor of the Bank of England, Adair Turner, President of the Financial Services Authority, the British regulatory authority.

Kerviel’s trial in France: the question no one is asking…

An English translation of Kerviel: la question que personne ne pose posted on my French blog on June 21st. Many thanks to E-blogs for the translation.

What have we learnt so far from Jérôme Kerviel’s trial about the big questions? Do his superiors know more they pretend about the transactions he was doing? Another question we would like to know the answer: is entering fictive operations in the reporting system to hide his positions –as Kerviel says– a common manoeuvre in the traders’ world?

Is it because I had the opportunity to be a trader on futures markets that I don’t really care about the answers? I don’t know. What amazes me on the other hand is why, during the first two weeks of the trial, no one asked what I think is a crucial question, a question that I’d call “à la Lord Adair Turner”, from the name of the president of FSA (Financial Service Authority), British markets controller, who wondered, not long ago, if everything in the financial system was useful from a social point of view.

My question, which doesn’t seem to be of any interest to anyone but me, is the following: how useful were Kerviel’s transactions to his bank? Because, really, choosing the “long” position hoping the price will raise or the “short” one, hoping the price will go down and with “big” amounts of money, what’s the use?

Let’s take a simple example. Kerviel made a bet for Société Générale that could bring in –let’s be “moderate”– one million Euros. And let’s say, to put it simply, that BNP Paribas made the opposite bet. This time, Kerviel wins: Société Générale wins a million Euros and BNP Paribas loses a million Euros. Is it useful in anyways? The answer is yes because dividends and gains of the winner raise and decrease for the loser.

What about us? We don’t really care about that. Except… except if one of the two banks consistently wins while the other one consistently looses. In that case we, as tax payers, will have to save the bank which lost with our own money, bank that of course is “too big to fail”. In others words, what all little Kerviels of the world are doing, and the banks with them is just creating a systemic risk. So, in the end, is that “socially useful”?