Barclays, banking and failure - how to generate new directions through AI.

The Guardian web has just published an article that shows perfectly where several of the key players stand on the 'Barclays Affair' and other recent misdeads of the 'masters of universe.' 

"The government is to order a review of the operation of the inter-bank lending rate, or Libor, following revelations of its frequent abuse by Barclays and other banks. The move follows Ed Miliband's call for a public inquiry into the "institutional corruption" of the banking industry after a series of banking scandals.

A spokeswoman for Downing Street said the review would be independent but that details of who would lead it have yet to be worked out.

Barclays were fined £290m for manipulating the inter-bank lending rate, and several other international banks are also under investigation.

The review falls short of the public inquiry demanded by the Labour leader, who said tougher rules and jail terms were needed to tackle the immoral culture and practices committed by a "corrupt elite" in Britain's banks.

On Friday the Bank of England governor, Sir Mervyn King, demanded a "real change in culture" as Britain's lenders were left reeling by the controversy."

King's intervention seems characteristically weak. The BoE it was of course that was so surprised by so much of the 2007-09 disaster (did it really not understood how Northern Rock had a such a flawed business model - many others did in real-time, not after the fact), having singularly failed to properly lead the thinking about ethics and practice in it's sector. This meak calling for a change of culture (to what precisely?) just reeks of capitulation, i.e. is the banking and insurance sector now so ethically and morally corrupt that there really is little option but to make vacuous calls for them to change their ways? Fat chance of that happening anyway without some decent-length prison sentences to act as electric cattle-prods. 


I like little about the USA, but the alacrity with which they imprison their financial miscreants is always worth a closer look. They even bring them out of their offices in hand-cuffs and with TV cameras nicely positioned to capture it all. Priceless moments of base satisfaction for the many who have had their financial futures so damaged - and this particularly includes small businesses, public services and millions of individuals. 


As Ed Miliband says, these are and were not victimless crimes; the consequences of casino-banking and all of its derivatives (excuse the pun) are now legion. They have caused the loss of hundreds of thousands of jobs in all sectors, damaged pensions in all sectors, left a generation of young people unlikely to find fulfilling employment, reduced numbers of university places, increased student debt massively, created gross mistrust and friction between people in all sectors who actually have a lot more in common than they might at first think, and so on.

The Guardian goes on to say: 

"The justice secretary, Kenneth Clarke, said bankers who had committed crimes must be brought to trial.

Bob Diamond, the chief executive of Barclays, and Marcus Agius, the chairman, have been summoned to appear before the Commons Treasury select committee on Wednesday.

Miliband pushed for a 12-month investigation to "find out what is going on in the dark corners of the banks" after the Financial Services Authority (FSA) uncovered "serious failings" in the sale of complex financial products to small businesses, just days after interest rate-rigging at Barclays was revealed.

The taxpayer-backed Royal Bank of Scotland (RBS), HSBC and several other lenders are also being investigated for manipulating the rates at which banks lend to each other, known as Libor and Euribor, to boost their profits.

Miliband said the inquiry, set up with cross-party support, would be asked to draw up a bankers' code of conduct going beyond the "narrow" professional standards enforced by the FSA.

Calling for the worst offenders to receive prison sentences, he said: "It should be about probity, honesty, integrity. Bankers should be struck off if they do the wrong thing … this is not a victimless crime."

Clarke said there should be criminal investigations and prosecutions where financial crimes had been committed.

"This is still being investigated, no doubt, but once these investigations are complete, if they have committed criminal offences, they should be brought to trial," he told the BBC Radio 4 Today programme.

The former chancellor said some of the banks' actions that came to light this week were shocking.

"Some of it is distorting vital interest rates, some of it is knowingly selling products they know are worthless to the less sophisticated people you are selling it to – which I regard as obtaining money by deception," he said. "Then there is the total moral bankruptcy of the comments being made by the people who are doing it."

King said he did not believe a Leveson-style inquiry was needed, but condemned the conduct in the industry.

"From excessive levels of compensation, to shoddy treatment of customers, to a deceitful manipulation of one of the most important interest rates and now news of yet another mis-selling scandal, we can see we need a real change in the culture of the industry," he said.

The FSA revealed earlier that Barclays, HSBC, RBS and Lloyds Banking Group had agreed to pay compensation to customers who were mis-sold interest-rate hedging products. Around 28,000 of the products have been sold since 2001 and may have been offered as protection, or to act as a hedge, against a rise in interest rates, without the customer fully grasping the risks.

Serious Fraud Office investigators are in talks with the FSA over the Libor scandal, while the Treasury has started to look at strengthening criminal sanctions for those responsible for market abuse.

Miliband described the Barclays fiasco as "the unacceptable face of capitalism", and called on Diamond to step down.

But Diamond, who was head of the bank's investment arm at the time of the allegations, reportedly told a meeting of analysts at US bank Morgan Stanley that he would not resign." So ends the article.

And you know, these latest high profile, national and international stories not only have a strategic impact, but for some, and I include myself in this, our personal experience over several years have told us at our individual levels what we are now learning in very specific and large-scale terms: that the banking and insurance industry has gone from hallowed, trusted institutions to largely being a necessary evil, to simply being an evil. 


Unfettered 'markets,' the specious claims of new "redefined standards" of "customer service" and the mythical allure of "shareholder value"; the off-shoring of services; the lack of a moral compass being consistently provided by Government and the Bank of England; the ethics of the mafia and many more contributing factors, have all mixed to create this farago. It only takes good people to do nothing that allows evil to flourish. Has the time come to show these institutions and their leaders especially, that this is where the line is being drawn? Yes and the pleasure of revenge aside, how best to do this? 


Well, apart from trial and prosecution, as Clarke calls for, a very different way to begin a moral and ethical recovery is through appreciative and generative ways; from within the very real and negative experiences and the wreckage of once sound institutions, searching for those remaining elements and practices that are positive, ethical, that stand against the predominant orthodoxy of 'money and massive profit above all else'; great and consistent customer services for its own intrinsic value and so on. These might offer a new route to redemption. 


Creating new visions that encompass the ethical, life-affirming and redemptive practices that many other organisations continue to achieve despite all of their current challenges and with none of the massive freedoms and continuing governmental financial backing that the banks and insurers enjoy. Seeing the 'whole system', not just their piece of the system, will encourage and prompt new thinking, fresh insights and may lead to the Design of new, honest and sustainable practices, involving stakeholders in their design, e.g. customers and clients, properly and for the long term, not just via flawed customer-feedback schemes. And so on. 


These are not 'soft' suggestions. They would involve the deepest of self-reflection, sharing and honesty - a thorough process of discovery, involving contact with many of those affected by the failures, yet with the appreciative purpose of seeking to unearth the best of what is and best of what yet may be. It is through these methods that a new culture might be born, not through vacuous calls to people to behave - that train has long since left. The old paradigm of problem identification and solutions, yet more law-making and punishment simply speaks to old thinking. Whilst I might get perverse personal pleasure in seeing the 'red braces' doing 'time,' I would derive much more pleasure from seeing really new and generative processes introduced at this point of maximum crisis.


Just a thought - what do you think?