I wrote an article for today’s Guardian about the causes of the Libor scandal: Traders are the ruin of retail banking
Amongst the many comments posted on it were several which said it was wrong to blame the investment banking/trader/"casino" operations for these ills as retail banks like Northern Rock had also failed. Please note that I did not say that combining investment banking and retail banking was the sole reason that banks failed, but whenever they are combined; a) the traders end up in control; b) they always seem to suborn the banks retail operations and sell the customers toxic products and/or manipulate markets against them; and c) once they are combined you have to save both because they are linked like Siamese twins.
I also gave several interviews to BBC radio this morning:
I made three main points:
1. With regard to Marcus Agius' resignation I gave the example of a submarine which sank when it was being refuelled because someone left a porthole open. The captain was court-martialled even though he was absent on leave. The point was that he was responsible for the culture of the crew that had led to the sloppy procedure. Of course it does not mean that the officer who was in charge of the refuelling shouldn't go too.
2. Retail and investment banking need to be split. This is now becoming a more popular stance, but I first said it publicly in the Daily Telegraph back in 2008 (Strong medicine needed to cure ills of cheap money).
3. It is no good blaming the culture of traders, you just need to keep them away from retail banking and the ability to fix or manipulate rates or benchmarks. Blaming traders for being greedy and manipulative in these circumstances i.e. where you put temptation in their way is like putting a fox in charge of a hen coop and then expressing surprise about the outcome.