A real investigation into the 2008 crash is long overdue

Published by The Times (23rd June, 2017)

Hallelujah! It has taken nine years. But at last some British bankers face criminal charges over the 2008 financial meltdown that caused such misery. Until now politicians have talked tough while prosecutors seemed to do nothing, despite public disgust over corporate malpractice. So feel free to celebrate: some of the masters of the universe who wrecked our world must endure their day in the dock.

Admittedly it seems strange that the former Barclays quartet are accused of wrongdoing — which they deny — when saving a bank rather than blowing one up. Many in the City hailed them as heroes, protecting their shareholders while saving taxpayers from another bailout. The public might prefer to see grisly Fred Goodwin or those slippery HBOS bosses whose ineptitude necessitated a £20 billion injection from taxpayers behind bars for sabotaging the West’s financial systems.

Yet until now no British bankers have faced criminal charges for reckless corporate behaviour over the crash. This country has been especially complacent, not even bothering with proper public investigation into the causes and culprits. Sure, there was the mild Vickers report into banking, the odd ban on holding directorships, a couple of lost knighthoods. Contrast this with Iceland’s response after the tiny island nation tried to take on Wall Street with such disastrous consequences.

Like something out of Fargo, a police chief from a sleepy village of 6,500 people was put in charge of more than 100 investigators with a mission to reel in the big fish. His team pursued email trails and documents with such diligence that 29 senior figures were sentenced to a total of 82 years in jail for crimes such as fraud and market manipulation. Famous names went from hosting lavish parties on large yachts to doing laundry duties in Kviabryggja prison beside a dormant volcano.

If only Britain had adopted a similar response. Instead the ripples from the crisis are still felt strongly: witness first Brexit, then the anger over austerity and fury over flatlining wages. Such is the political climate even a Conservative leader has declared war on markets, while the crisis helped to devastate public faith in national institutions.

This was not helped by bankers fighting efforts to restrain bonuses after bailouts. But the people who should be angriest are not those on the anti-capitalist left. It is those who believe in the transformative power of free markets who should push hardest for retribution against those guilty of distorting them. And if Britain had been a bit more like Iceland in clearing up the mess, we might even be a slightly less divided island today.

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