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Locking the stable door after the horse has fled… July 28, 2015

Posted by WorldbyStorm in Uncategorized.

Lucinda Creighton has a piece in the SBP this weekend on the banking crisis. And some of what she writes makes perfect sense. She notes that:

Ireland has suffered the costliest banking crisis since the Great Depression, according to the IMF. This costliest banking crisis has resulted in improvements in the broader financial regulatory regime, but there have been virtually no reforms of our actual systems of enforcement where financial or white-collar crimes occur.
There is no point having robust laws if either the criminals know they are not being enforced, or if the resources for their enforcement are inadequately deployed or underfunded.

And she continues:

If we want to be serious about combating white-collar crime in this country, bankers must be criminally held to account for reckless lending they commit, and our enforcement authorities must be adequately resourced to investigate, initiate and prosecute all forms of white-collar crimes.

Her solution is:

The type of sanction we in Renua Ireland propose for reckless lending is not about preventing bankers from taking calculated risks with strong enterprises or new businesses, but rather is modelled on British legislation and Central Bank governor Patrick Honohan’s proposals.
This legislation will impose criminal liability on a senior manager of a banking institution, fund or insurance undertaking who knowingly puts the viability of the institution at risk through their acts or omissions.

And yet, putting this in context with the piece referenced earlier in the week by William Keegan from the Observer isn’t it remarkable how she doesn’t seem to engage with a much more basic problem – which is, of course, the idea, still extant, that the state will become the entity that will bail out, at public expense, the banking sector when that sector runs into trouble.
Of course there should be sanctions for appalling behaviours, but surely there should be a deeper consideration as to the very nature of the structures that have led to pernicious outcomes that have impacted severely upon citizens and communities who had no hand or part in those behaviours or decisions taken?
But perhaps to do so would be to seek a fundamental reworking of these structures.


1. Gewerkschaftler - July 29, 2015

It’s certainly been a remarkable achievement of finance capital to have finagled a near universal insurance against bank failure on the back of this crisis.

And of course this insurance is paid for by workers through taxation and the destruction of public services upon which they depend.

It’s also been the greatest disservice from big fish like Obama down to pathetic little yes-men like Noonan & Kenny to make this universal insurance the new normal.

The insurance isn’t quite universal – it does not of course apply to banks in parts of the empire of finance to which they intend to lay waste – like Greece.


2. Gewerkschaftler - July 29, 2015

One of the things that gets my goat about Left Platform-ish fantasy solutions to a collapsing banking sector is the universal cry of “nationalise the banks!”.

Screw that. Along with the banks come their debt liabilities.

A smarter way is to set up a new democratically and transparently controlled bank, and enable free transfer of deposits to that bank.

Then let the private banks go to hell.


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