LIBOR: more outrage, please

Matt Taibbi in Rolling Stone:

To me what’s missing from all of this is the “Holy Fucking Shit!” factor. This story is so outrageous that it shocks even the most cynical Wall Street observers. I have a friend who works on Wall Street who for years has been trolling through the stream of financial corruption stories with bemusement, darkly enjoying the spectacle as though the whole post-crisis news arc has been like one long, beautifully-acted, intensely believable sequel to Goodfellas. But even he is just stunned to the point of near-speechlessness by the LIBOR thing. “It’s like finding out that the whole world is on quicksand,” he says.

Aditya Chakraborty in the Guardian:

At a hearing in the US last month into how JP Morgan lost up to $9bn in the UK in derivatives trading, congresswoman Carolyn Maloney commented: “It seems to be that every big trading disaster happens in London.”

This is surely where the pressure from the Libor scandal needs to be directed. Miliband is right to demand a public inquiry. But rather than a nice, compact affair that can be swept under the ministerial carpet, any investigation needs to understand how to reform the finance sector so that crises like these don’t recur; and so that banks actually work in the public interest rather than hire propagandists to pretend they do. Because in the end, financial reform is not about technicalities, but about politics: deciding what role banks should play in an economy, and what kind of economy we want.

And just as the Leveson investigation has unpicked the toxic intimacy between the Murdoch empire and the political classes, so any inquiry into finance needs to expose the strength of its grip on our politics.

In the wake of the Lehman’s collapse of 2008, there was much talk about how the relationship between state and finance would be changed in the public interest. Those efforts were effectively killed off by the finance lobbyists and, if we’re honest, the unpreparedness of progressives in Britain to seize the opportunity. The Libor scandal offers a second go at the same argument. We either have it out this time, or we run the risk of repeating 2008. Only next time, the British might need to cough more than 20 grand each. A lot more.