Michael Meacher
The lesson of the HSBC debacle is not merely that tax
evaders must be hunted down much more relentlessly, but that in its present
form it’s ungovernable. It’s no good saying HSBC was run in a ‘federated way’,
but now management has been tightened up (is anybody really taken in by that
anyway?).
We were told that in 2012 when the HSBC Mexican bank was found guilty of money laundering for pariah states, drug cartels and big mafia crime syndicates, but 3 years later the same charges have erupted elsewhere.
A senior US Department of Justice official got it right when he said that HSBC’s culture was “pervasively polluted”.
The truth is that HSBC, once a cautious and conservative organisation, was derailed in the late 1990s by its chairman Sir John Bond into a huge overseas buying spree to satisfy the board’s ambition to turn it into a global empire.
Any idea of serving the interests of Britain was pushed to the margins and the empire-building avarice of Bond took over and went wild.
What is a bank for?
Its function should be as an intermediary bringing together the savings of depositors and allocating them judiciously for well-chosen productive investments.
However under the influence of the ideology of unalloyed market power exalted by neoliberal capitalism over the last three decades, the banks have taken on the role of corporate expansion and profit maximization in their own right.
Overwhelmingly bank lending has been shifted towards overseas speculation, devising and promoting of artificial tax evasion and avoidance schemes, buying and selling of prime property particularly in central London, and the invention and marketing of exotic financial derivatives.
Only a shockingly small 8% of UK bank lending was allocated to productive investment in the British economy.
This perversion of the proper role of banks was aimed to satisfy the desires of the super-rich (euphemistically described as ‘high net worth individuals’) because that is where it was perceived that the biggest profits lay – and, though this was played down, the biggest risks.
The latter is exactly what happened with HSBC’s purchase for £9bn in 2003 of Household, a US sub-prime lender that went bust in 2006, the purchase in 2002 of the Mexican bank that allowed Mexican and Colombian drug cartels to launder nearly $1bn through HSBC, and then HSBC’s Swiss bank providing a no-questions-asked cash machine for super-rich tax evaders and avoiders.
So what should be done?
The neoliberal business model for banks has irretrievably broken down. There is no question but that HSBC should be broken up.
We need smaller banks targeted on the real needs of the British economy, and if the private sector cannot deliver this, the big banks should be taken into public ownership.
Also, accountability has completely collapsed in the financial sector, as the depredations of Bond and Green clearly reveal.
The closed circle of City of London insiders, largely from the same class and the same universities, also needs to be broken up.
I will return to that on another day.
We were told that in 2012 when the HSBC Mexican bank was found guilty of money laundering for pariah states, drug cartels and big mafia crime syndicates, but 3 years later the same charges have erupted elsewhere.
A senior US Department of Justice official got it right when he said that HSBC’s culture was “pervasively polluted”.
The truth is that HSBC, once a cautious and conservative organisation, was derailed in the late 1990s by its chairman Sir John Bond into a huge overseas buying spree to satisfy the board’s ambition to turn it into a global empire.
Any idea of serving the interests of Britain was pushed to the margins and the empire-building avarice of Bond took over and went wild.
What is a bank for?
Its function should be as an intermediary bringing together the savings of depositors and allocating them judiciously for well-chosen productive investments.
However under the influence of the ideology of unalloyed market power exalted by neoliberal capitalism over the last three decades, the banks have taken on the role of corporate expansion and profit maximization in their own right.
Overwhelmingly bank lending has been shifted towards overseas speculation, devising and promoting of artificial tax evasion and avoidance schemes, buying and selling of prime property particularly in central London, and the invention and marketing of exotic financial derivatives.
Only a shockingly small 8% of UK bank lending was allocated to productive investment in the British economy.
This perversion of the proper role of banks was aimed to satisfy the desires of the super-rich (euphemistically described as ‘high net worth individuals’) because that is where it was perceived that the biggest profits lay – and, though this was played down, the biggest risks.
The latter is exactly what happened with HSBC’s purchase for £9bn in 2003 of Household, a US sub-prime lender that went bust in 2006, the purchase in 2002 of the Mexican bank that allowed Mexican and Colombian drug cartels to launder nearly $1bn through HSBC, and then HSBC’s Swiss bank providing a no-questions-asked cash machine for super-rich tax evaders and avoiders.
So what should be done?
The neoliberal business model for banks has irretrievably broken down. There is no question but that HSBC should be broken up.
We need smaller banks targeted on the real needs of the British economy, and if the private sector cannot deliver this, the big banks should be taken into public ownership.
Also, accountability has completely collapsed in the financial sector, as the depredations of Bond and Green clearly reveal.
The closed circle of City of London insiders, largely from the same class and the same universities, also needs to be broken up.
I will return to that on another day.
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