The London Olympics have ended. The bankers who had been working from home for the past two weeks can now return to their perches in Canary Wharf. Yet while the athletes and spectators have left town, the nationalistic flag-waving in the banking world is only just getting started.
Last week a knight was called upon to rescue one of the top British banks. Sir David Walker was chosen to replace Marcus Agius as chairman of Barclays. Agius was forced to resign because of the Libor scandal.
Sir Walker is 72 years old and, as the Wall Street Journal puts it, “as British as Sunday roasts and warm beer.” That’s a very good thing according to an anonymous insider cited by WSJ:
Mr. Walker quickly emerged as the front-runner [...]. Several things attracted the board to him. For one, it had come to believe that a key reason the U.K. establishment turned on Mr. Diamond was that he is American.
That’s quite a strategy on the part of the Barclays board members. “Let’s get one of our own so that we can get away with stuff like this in the future.” At Barclays nationalism now seems to form a part of the ultimate defense strategy.
Next we have the case of Standard Chartered. As you are probably aware the bank was recently treated to a very public flogging. The New York Department of Financial Services says that Standard Chartered engaged in a bold-faced, multi-year strategy in which it “schemed with the government of Iran” to break US sanctions. It alleges that StanChart helped to move $250 billion via 60,000 suspect transactions.
These charges are quite serious. Indeed the International Business Times pointed out that if the StanChart were a person, not an institution, it would run the risk of being condemned to 25 years in jail.
As it is the DFS has threatened to take the bank’s New York State banking license away. This would be a mortal wound to StanChart’s international business. Yet some British commentators, resentful of having their last unsullied bank dragged through the mud by some obscure regulator, have wrapped themselves in the Union Jack to rush to the bank’s defense.
For example, Boris Johnson took time out from his Olympic hosting duties to speak to the London Spectator:
[Y]ou can’t help wondering whether all this beating up of British banks and bankers is starting to shade into protectionism; and you can’t help thinking it might actually be at least partly motivated by jealously of London’s financial sector – a simple desire to knock a rival centre.
Other politicians followed suit:
John Mann, a Labour member of the Treasury select committee, said he detected an “increasing anti-British bias by US regulators and politicians” which could have been influenced by a desire to shift business from the City to Wall Street. ”This is a real power grab [by US authorities] and the stakes are very high,” he said.
He’s right, the stakes are high. Can we have objective investigations into an industry that is now implicitly backed by taxpayers? Or will nationalistic concerns take precedence over a search for the truth?