Lib Dems should back a judge-led inquiry into financial scandal

by Stephen Tall on July 4, 2012

I get why the Tories are opposed to a judge-led inquiry into the scandalous rate-rigging practices employed by Barclays and other banks: their experiences of the Leveson Inquiry show how scandals, even ones that blend across the red/blue parties, have a habit of rebounding on the government of the day.

I get why Labour are in favour of a judge-led inquiry: so complicit were Labour (and Ed Balls in particular) in the catastrophic financial mess of the last few years, of which the banks are just one part, that they are desperate to appear transparent in the hope the inquiry will rebound on the government of the day.

But I don’t get why the Lib Dems are lining up with the Tories to oppose a judge-led inquiry.

I accept there are reasons which make it complicated: such inquiries take time, cost money, run the risk of interfering with parallel prosecutions. Yet similar concerns applied to establishing Leveson, a forensic inquiry for which Nick Clegg deserves much credit.

Leveson happened because it was recognised a parliamentary select committee would be unable to dedicate the time, would lack the necessary expertise, and would be unable to resist partisan conclusions.

The same applies to the financial scandals involving the banks.

And I’m afraid today’s woefully inadequate inquisition of Barclays’ ex-CEO Bob Diamond by the Treasury Select Committee confirms the view that most MPs are out of their depth when it comes to trying to find the right questions to get at the facts that actually matter. Perhaps, if as David Allen Green suggests, MPs were willing to deploy specialist parliamentary counsel to pose questions it might be different.

We need an inquiry which gets beyond the politics

But there is a bigger reason why a judge-led inquiry is important. Indeed, my opening paragraphs are themselves good examples of why those with a political agenda shouldn’t be trusted with getting at the truth: my/our/their agendas will always be mistrusted, not only by those from other parties, but also by the wider public.

We don’t yet know what Leveson will conclude, but the due process Sir Brian’s inquiry has followed has enabled facts to surface, and time and space for better-informed reflection and debate. Does anyone seriously imagine a bunch of MPs will create an equivalent impact?

Attention to date has focused on the bankers, and to some extent unfairly concentrated on Barclays, the first to confess to, but by no means the only bank involved in, misleading practice. An inquiry need not take over-much time bottoming out the banks’ duplicity in rate-rigging: the USA and its department of justice thankfully takes white-collar crime more seriously than do the Brits, and has already done much of the heavy lifting.

What is still needed is to place this behaviour within the context of what politicians expected. For years a convenient blind eye was turned to the excesses of the banking sector because the government was dependent on a debt-fuelled consumer boom to feed its debt-fuelled expansion of the public sector.

That is a reality which is still imperfectly understood and only partially accepted. It is a reality which only a judge-led inquiry can be trusted to tell.

* Stephen Tall is Co-Editor of Liberal Democrat Voice, a Research Associate for the liberal think-tank CentreForum, and also writes at his own site, The Collected Stephen Tall.