News & Analysis
Hey, We Told You So! ... Bank of England Head Demands Immediate and Far-Reaching Bank Reforms
Bank of England head says banks must change culture ... Sir Mervyn King: "Something went very wrong with the UK banking industry and we need to put it right." Bank of England governor Sir Mervyn King has called for a change in the banking culture, saying that customers have received "shoddy" treatment. He added that bank leaders had "let down" the many honest and hard working people in the financial sector. Sir Mervyn's comments come on the day banks were found to have mis-sold financial products to small businesses. – BBC
Dominant Social Theme: These banks are corrupt and the Bank of England has to do something about it.
Free-Market Analysis: We've been tracking this dominant social theme for more than a year now. The elites that want to run the world are focusing clearly on a replay of 1930s Pecora Hearings that gave us public markets, "self-regulatory" organizations and the SEC, CFTC, etc. For some of our articles on the subject, just search the 'Net using "Daily Bell" and "Pecora."
None of the "reforms" initiated by the Pecora Hearings did a thing to clean up an increasingly centralized and corrupt financial services industry. The Depression itself – which eventually went worldwide – was initiated by reckless overprinting of money by the newly founded US Federal Reserve.
The amount of money illegally printed by the Fed generated the Roaring 20s and then the great stock market crash – again a phenomenon that affected the world much as the US financial crisis of 2008 spread around the world.
As the effects of the 1929 stock market crash spread, Franklin Delano Roosevelt was faced with the possibility that savers would try to exchange their dollars for gold – that banks didn't have. At this point, the rashness and illegality of what Fed governors had done would be found out.
The solution apparently was bank holidays. But it had to go further than that. Since the facility of central banking itself could not be blamed, Roosevelt and his handlers decided to generate what came to be known as Pecora Hearings.
These hearings were intended to pin the blame for the stock crash and the Great Depression quite firmly where it didn't belong – on the private sector rather than on the private/quasi-public Federal Reserve.
Accordingly, the Pecora Hearings were launched, precipitating the regulatory era under which the West now suffers.
Regulation by definition can do nothing ameliorate capitalist disasters within the context of monopoly-fiat money. The disease of central banking that has spread around the world in the past century is responsible. This is quite clear. Regulation – a backwards looking price fix – can never anticipate the next financial meltdown.
Nonetheless, the mechanism itself is fairly simple and repetitive. First central bankers print too much creating a boom and then much of the value that has been created in the boom disappears during the bust. In fact, much investment is found out to be mal-invested and the economy terribly distorted by the ongoing over-printing of money.
In the past the extent of intentional culpability of central bankers has been debated but as the Internet and the information it purveys has evolved, we begin to be aware that those in charge of the system must understood its true destructiveness.
By expanding and contracting the money supply, the power elite essentially – eventually – bankrupts many who are caught in these hellacious busts and must sell otherwise good businesses for pennies on the dollar.
Those who own and run the printing presses – the world's top central bankers – are in a fine position to take advantage of these fire sales as they print the money that can be used to purchase such businesses. We find out none of this from the "Beeb" – nor from Mervyn King himself. Here's some more from the article:
It is the third major scandal this year, following manipulation of lending rates and loan insurance mis-selling. Speaking at the launch of the Bank's twice-yearly Financial Stability Report, Sir Mervyn demanded immediate and far-reaching action to reform the structure and culture of the UK banking industry.
He said: "That goes to both the culture in the banking industry and to the structure of the banking industry, from excessive levels of compensation, shoddy treatment of customers, to deceitful manipulation of one of the most important interest rates and now this morning to news of yet another mis-selling scandal.
"We can see we need a real change in the culture of the industry. And that will require two things. One is leadership of an unusually high order and changes to the structure of the industry." His comments were echoed later by the Prime Minister, David Cameron, who said at the EU summit in Brussels: "British people are crying out for a return to good old-fashioned banking... and not put that at risk by big investment banking. "That's why the governor is so in favour of changing culture at the banks and so am I."
Criticism from business leaders is also growing, with the head of the Institute of Directors (IoD), Simon Walker, saying in a statement: "As well as ripping off their customers, they have also harmed the reputation of business as a whole - they should feel deep shame for the damage they have done." The IoD said there should be a clear-out of leadership in many of the banks and "new blood" brought in.
Notice, how commercial banks and others are being blamed for "damage" ... essentially for financial criminality. There is no doubt of such criminality of course, but it comes from the ongoing centralization of money and Money Power.
It is this centralization that causes the very criminality that King and others decry. In fact, they are culpable for it. As monopoly fiat money continues to drive the industry into consolidation, competition is drained away. Without competition, all sorts of destructive practices survive and thrive.
As the power elite continues to push legislative processes in Britain and the US toward neo-Pecora hearings, you won't likely read much of this kind of analysis. The idea is to point fingers at the private sector and demand more regulation.
In fact, actors like King are considerably indisposed to larger inquiries that might focus on central banking misdeeds. It is noteworthy that King has gone out of his way to maintain that a "[broad-based] inquiry was not necessary, as the wrongdoing was plain" – according to the Beeb.
"We don't need any inquiry to know what we should be doing. There must be many people who work in banking today who know that they are honest, hard-working and feel they have been let down by some of their colleagues and indeed their leaders."
How else does King wish to shape the process? "He has called for the government to implement the recommendations of the Vickers Commission on banking, which said that more risky investment banking should be separated from day-to-day banking needs of individuals and small businesses."
Again with this Glass-Steagall remedy! What nonsense. We are supposed to believe that the market itself has failed so grievously that only regulatory authority and legislation can protect consumers from abuses?
In fact, banks and banking survived for thousands of years without this sort of Draconian solution. The problem with banking is not that that the market hasn't properly bifurcated its various parts but that CENTRAL banking has drained competition from the market and set up a kind of industrial monopoly.
Absent market competition, there is no way of introducing appropriate discipline into the market. With money and business guaranteed by their central banking financiers of last-resort, banking leaders have no incentive to treat customers fairly or even to lessen their risk-taking.
We're past the point of believing current finger pointing is merely the result of coincidental events. This is a scheme in our view, a cold-blooded strategy to subject the marketplace to a kind of coup de grâce. If it does come to hearings, you can bet that the financial industry that emerges shall be thoroughly beholden to regulators and the regulatory process.
Whether it is the phony LIBOR scandal (which we have written about a great deal) or efforts to "reregulate" the financial industry for other "crimes," we see considerable evidence that the power elite is readying a final show trial for capitalism. Once it takes place, the industry shall be stripped of any pretense of independence.
Regulators shall rule – and therefore governments and the elites behind them. Henceforth the last vestiges of the ability of people to gain access to "public" markets shall be subject to the strict scrutiny of the powers-that-be. If you are not sufficiently allied with their globalist agenda, you will not receive any funds at all, nor have any chance too.
The last act of this farce would seem to be playing out, orchestrated by such unrepentant flim-flam artists as Mervyn King. He knows full well where the real blame lies for the current dysfunctional monopoly-fiat financial system. But he would rather the West collapse into depression than explain or reveal it.
Conclusion: In fact, those to whom King reports are probably anticipating the onrushing disaster with relish. They've likely worked hard over generations to precipitate it.