Fixing The System, Or Just The BBC Fixing The Narrative?

The BBC veil slips again as ‘the bankers’ are lazily blamed for everything yet again

There’s an inevitable expectation, when awaiting a BBC documentary on Britain’s banking industry, that something of a one-sided and partisan account of its subject-matter is more likely than not.

Back in 2011, for instance, the BBC aired a documentary called “Britain’s Banks – Too Big To Fail?” made by Robert Peston, which somehow managed virtually to erase from history the significant role in causing the banking crisis which was played by Gordon Brown’s disastrously inadequate regulatory regime and his pressure on Lloyds TSB to take over the wreck that was HBOS. That Peston was Brown’s most favourable biographer, whose closeness to him and the claque surrounding him manifested itself in a number of apparent journalistic coups sympathetic to Brown, was no doubt mere coincidence.

So an understandable sense of foreboding, even cynicism, loomed over the approach of the Beeb’s latest oeuvre in this rich genre, “Bankers: Fixing The System” of which the first part of three aired on Wednesday night. Although not as much of a partial whitewash as the Peston effort, it still didn’t disappoint in the partisanship department. But you can watch it below, and judge for yourself.

Click the button to view the episode

We started well, with the FT’s inestimable Gillian Tett – for my money the author of, in her “Fools’ Gold”, one of the very best books on the origins of the 2007-08 crisis in the derivatives and capital markets – stressing the incongruity of our current political class needing the UK’s banks to be profitable so as to be able to play their part in financing recovery, but at the same time recoiling in affected horror when banks make healthy profits. But after that, things started to go downhill.

There was a strong inference that the cost of the 2007-08 taxpayer bailouts of the banks that failed was the principal, and continuing, cause of the UK’s structural deficit (and consequent debt). This is a tired left-wing trope, but one to which the BBC apparently willingly subscribes. In fact, Brown’s bailouts added about £120 billion to a public sector net debt which was already at around £720 billion, thanks to Brown’s fiscal incontinence in running annual structural deficits, despite record tax revenue receipts and a then-prosperous economy, since 2002. The idea that the bank bailouts caused the UK’s fiscal deficit is pure bunk.

The programme then moved to Barclays’ manipulation of the key LIBOR rate: cue suitably grave expressions of outrage, plus a touch of historical revisionism, from (Lord) Adair Turner, who was head of the Financial Services Authority over much of the period. But the FSA was charged with overall prudential regulatory supervision of the banking industry, so it might have been reasonable to quiz Turner why, on his watch, it so signally failed to pick up widespread LIBOR rigging, not only by Barclays, but by many other market participants too. But this was not pursued.

Neither was the role played by the flawed tripartite regulatory regime of HM Treasury, Bank of England, and the FSA, designed and implemented by Brown and Balls. Under this, the FSA was obliged by Brown to concentrate its regulation on an individual institution-by-institution basis, rather than on the stresses building up in the entire system, and to focus on such weighty issues as how long call centres took to answer incoming calls, instead of preventing and detecting interest rate market rigging. But this was largely ignored.

Largely ignored also was the effect of the excessively loose monetary and interest rate policy pursued by a Bank of England restricted by its Brownian remit to managing inflation and interest rates through a Monetary Policy Committee nominated by Brown, and, arguably, deprived of a mandate to warn of systemic risk, specifically to inhibit any challenge to Brown’s disastrous indulgence of a hyper-expansion of personal debt to give the masses the illusion of prosperity, purely for the purposes of political advantage.

Barclays’ Chairman throughout much of the LIBOR-rigging scandal, Marcus Agius, also featured. Cue more expressions of regret and mystification, and a little more historical revisionism too. But it would have behoved any seriously penetrative interview to enquire of Agius how it was that his Barclays Board so signally failed to discharge its fiduciary duty to shareholders to manage operational, compliance and interest-rate risk to ensure that no such manipulation took place. What on earth was the Barclays Group Audit Committee, with a specific mandate to satisfy itself that adequate systems of compliance and risk control were in place and working, actually doing? Yet its chairman, and Barclays’ senior independent non-executive director, BT’s Sir Mike Rake, was not mentioned.

Undoubtedly, it suits the political class to push the “banks solely to blame for budget deficits” meme, because it conveniently obscures and diverts attention from their own uncontrollable fiscal profligacy. To some extent, that requires a media compliant enough in the prevailing anti-business mood, and ignorant enough of financial regulation, to propound the narrative. Part 1 of “Fixing The System” was more about fixing the narrative in the public mind than it was about anything else.


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