Governor’s scathing attack on industry’s culture of excess as fresh scandal eruptsSir Mervyn King, the governor of the Bank of England, piled the pressure on the Megalopolis on Friday when he said something had gone “very incorrect” with Britain’s banks that needed to be place fair.As Barclays and other high street banks became embroiled in a fresh mis-selling scandal, King launched his most scathing attack yet on the culture of banking in the five-year-extended financial crisis.King refused to affirm Bob Diamond was a “fit and proper” person to run Barclays as the reputational hurt from an interest rate-fixing fine led to another fall in the bank’s shares. More than £4bn has been wiped off the value of the bank since the rate-fixing scandal emerged.”It is age to do something about the banking system,” King said. As he warned that the outlook for financial stability had deteriorated as a result of the eurozone crisis, he dismissed mounting calls for a Leveson-style investigation into banks, saying that enough was already known to implement root and branch reform of the Megalopolis.However Ed Balls, the shadow chancellor, said an inquiry was needed. He said: “The governor is fair to affirm that there is a absolute cultural difficulty in our banks which these latest scandals expose, and I don’t reckon it is fair for administration ministers – or for the governor, really – to affirm we have had enough inquiries.”King said: “Many human beings in the banking industry are hardworking and feel terribly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal.”Barclays, HSBC, Lloyds Banking Collection and Royal Bank of Scotland were ordered by the Financial Services Authority (FSA) to pay redress to small business customers after it found “serious failings” in the path they were sold complex financial products intended to protect them from interest rate rises. The revelations caused outrage among business groups, with the Institute of Directors, the British Chambers of Commerce and the CBI all condemning the fleecing of their business members. John Longworth, director common of the BCC, said the latest scandal would “hurt business’s perception of banks further”.Yesterday, the RBS chief executive Stephen Hester bowed to pressure caused by the continuing row about the machine meltdown that left some customers unable to access their accounts by forgoing a bonus of up to £2.4m for 2012.However, the pressure on Diamond is much greater, however the Barclays boss has made it clear he will not voluntarily step down. The bank’s chairman, Marcus Agius, is also in the border of fire and may be forced outside in an attempt to exhibit that a boardroom executive is paying the value for the record-breaking £290m fine and hurt to the bank’s reputation. Barclays shareholders are thought to be considering appointing a figurehead to conduct a review of the culture inside the bank.The political pressure continued to mount on Diamond. Questioned whether he was the fair male to lead Barclays, David Cameron said: “I can’t affirm that. He has questions to answer.”The prime minister’s remarks mirrored those of King and Lord Turner, chairman of the FSA, who both twice declined the opportunity to affirm that Diamond was “fit and proper” to run Barclays.Barclays was fined a record £290m on Wednesday for attempting to manipulate crucial interest rates known as the London interbank offered rate (Libor) and the Euro interbank offered rate (Euribor), both of which are crucial in setting the value at which customers borrow for mortgages, between 2005 and 2009.The fine was published alongside a series of emails showing how traders helped each other to try to manipulate interest rates with promises of champagne and quips like “this is for you, huge boy”.Sir Roger Carr, president of employers’ body the CBI, said: “The manipulation of the Libor arrangements is deplorable and undermines international trust in the integrity of the Megalopolis. The weakness must be addressed and the culprits punished.”King said the inquiry of who ran the UK’s banks was a inquiry for another day, insisting that the immediate priority was for the administration to implement in complete the recommendations of the Independent Commission on Banking, headed by Sir John Vickers, which called for firewalls to be locate up between the investment and retail arms of banks. He said the cultures of investment and retail banking were different and needed to be separated.Turner said that there was a “culture of cynicism and greed that is quite shocking”. Andrew Bailey, the top banking regulator at the FSA, said the onus was on bank boards to capture action. “If, as we immediately see, there is a fundamental breakdown in trust, the bank boards have to recognise that trust has to be got back and they have to reckon very dense about how they do that,” he said.The prime minister agreed with King’s calls for a cultural alter in banking. “We know what’s gone incorrect and largely we know what needs to be done to place it fair. What you are going to see from the administration is an incredibly methodical series of actions to deal with all of these problems,” he said as he rejected the call by Balls for a Leveson-style inquiry.”Human beings are shocked by the swaggering arrogance of what we have learned in the at the end 24 hours. We really demand to open this wide open,” said Balls. Knowing he was opening himself up to a political backlash as he was Megalopolis minister for part of the Labour administration’s age in office, Balls admitted mistakes had been made.Lord Oakeshott, the Liberal Democrat peer, said Balls and the former prime minister Gordon Brown would demand to be the first two witnesses called to give evidence.BankingBanking reformFinancial Services Authority (FSA)Mervyn KingBarclaysLiborInterest ratesFinancial sectorBob DiamondHSBCLloyds Banking GroupRoyal Bank of ScotlandRegulatorsLarry ElliottJill TreanorNicholas Wattguardian.co.uk © 2012 Twitter News and Media Limited or its affiliated companies. All rights reserved. | Employ of this content is subject to our Terms & Conditions | More Feeds
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