It is indeed a scandal, the fixing of the London inter-bank offered rate that the Bank of England could not control. What is the point of it, in the absence of such a mechanism? Should there perhaps be an independent body or some senior civil servant to oversee such a rate and its fair dealing? I think there should be
The fact that these practices have been in operation since late 2008 makes it a bigger scandal, although the inability to control or monitor it properly is left to open question. Those were difficult times, post the Lehmann collapse in October 2008, when credit-worthy institutions such as Barclays stood staid and continued their business when a lot of other organisations were having to be bailed out by the Exchequer or were simply folding up.
When the Bank of England rate is low due to market conditions, it would be natural to expect that the Big Four have a rate pegged to that. Four or five percentage points is quite high, but Barclays seemed to have a prime position in having the lions share of the market, not "low-balling" as Baroness Vadera may have liked it to be, but instead going for the "higher end" of it. This would have effectively meant offering loans and cash flow to Barclays customers with good credit ratings who could pay that rate and get the money. Those who would be looking for a lower rate would be counted out, which meant a lot of customers in those hard times. The case is still valid today as recession once again threatens economies in Europe. Cheaper money should be made available to all enterprises, and bankers must take a responsibility to ensure it is available to a wider customer base. Only then can an economy grow and create wealth, through enterprise and creation of jobs. Bankers should not be reminded of the function they have in that. When the customers flourish, so can the bankers continue to do so as well.
If the Bank of England had been able to influence such a rate, or indeed even set such a rate (and perhaps it should, it ought to, in the future), lots more businesses would have been able to access much needed funds. When the economic market conditions dictated a lower rate for the Central Banks, the High Street lenders should also have gone by that guideline. Having the lions share of funds and lending brought healthy profits to Barclays, and bonuses to its CEO and the top-fliers in the investment division.
It is to the credit of the Financial Services Authority to bring this scandal to light, but it has taken a fair while to get round to it. What about the other checks and balances within the system? This seems like a saga of dedicated men, all pursuing their own, and to each one in their own light, honourable ends.