It seems like there is a new banking scandal everyday now. Every time I think we have heard it all, aÂ new scandal pops up. I think we are all getting used to billions in financial fraud now. Libor scandal thisÂ month, rogue trader last month, and the next banking bailout coming in the next few months, when theÂ bankers get themselves in trouble again
But one thing that still amazes me is how we think that Bob Diamond is the one behind all this madness,Â Fred Goodwin last time or whoever the next CEO is when we unearth similar financial fraud in LloydsÂ and HSBC next.
As crazy as it sounds, I found myself feeling a little sorry for Bob Diamond this morning. Now normallyÂ I would be the last person offering any sorrow to the CEO of a bank, but if the truth be told, DiamondÂ just happened to be sitting on the seat at a time when whoever was sitting on the seat would have hadÂ the same fate. Our banking system is designed in a way where fraud is inevitable. Remember, politicianÂ wants to get more people borrowing money to push up property prices and the economy just as muchÂ as Bob Diamond does.
So when George Osborne calls for the job of Bob Diamond, he should take a look in the mirror andÂ wonder why they keep getting more of the same.
All policies that have come since the wake of the banking crisis have all been about getting back toÂ business as usual. Business as usual for a bank is to find as many ways as possible of getting as manyÂ people as possible into debt. That might be through credit cards or mortgages, but the governmentÂ wants it too. The success of the company is dependent upon it, the shareholders dividends areÂ dependent upon it, the bankers bonuses are dependent upon it and the CEOâ€™s job is dependent upon it.
So it is time for politicians, bankers and us to make up our mind. Do we want more debt, moreÂ mortgages and more credit cards which will involve more financial fraud to achieve, or do we want realÂ change in banking?
Here is a recent interview I did with Max Keiser looking at some deeper issues…
If we want to put an end to the scandals, we need banking reform, we need a complete cultural shiftÂ within banking and we need banks that lend to job creating businesses.
If we want business as usual then keep blaming the CEOâ€™s and call for Bob Diamondâ€™s job, but have itÂ be known that nothing will change and Bob Diamond is only doing what all the other banks are doing inÂ order to prop up a banking system that needs big change.
The change will never come when we focus on the CEOâ€™s and their jobs. It is easy to get angry aboutÂ their bonuses and their fraud, but the change has to come from government enforcing structuralÂ changes in banking and a cultural shift in what the bank is for. Letâ€™s try to stay focused on what the realÂ problem in banking is.
P.S. Love to hear your thoughts on Bob Diamond and the Libor scandal
Simon Dixon is author of â€˜Bank To The Future: protect your future before governments go bustâ€™, CEO ofÂ BankToTheFuture.com and an active banking reformer.Simon Dixon