Libor: what about the regulators?

More light needs to be shone on the FSA.

It’s hard to know who to point the finger at when it comes to the Barclays’ culture of deceit. While most are simply blaming the bankers, Ann Pettifor, for one, blames the economists. Others, meanwhile, are blaming the regulators. 

One should probably blame all three (not to mention politicians), but if an enquiry is to be pursued, more light certainly needs to be shone on the regulators. The Times yesterday implicates the Bank of England in the Libor scandal, suggesting they may have not only condoned the system of manipulation but actively encouraged it. From our experience this doesn’t appear to be at all far-fetched.

Looking into the role of the finance sector in commodity speculation, we became increasingly disturbed by the lax approach adopted by the FSA. When we dug deeper, we found that the FSA was lobbying the European Union on behalf of the City, to prevent effective regulation of speculation by Brussels. 

As the FSA is paid for by the City, almost entirely governed by the City or ex-City bankers, and with virtually no transparency, its weak approach to Barclays’ failings should come as no surprise. This is in stark contrast to US authorities, who imposed fines on Barclays almost 4 times greater than those levied by the FSA.

Barclays has been at the heart of commodity speculation activity AND at the heart of fighting off any regulation. A letter to the Commodities Futures Trading Commision in the US, urges a light touch approach.  However WDM research has exposed Barclays as the biggest UK bank involved in speculation in the commodity derivative markets, which has contributed to price spikes such as those in 2008 and 2011 which pushed millions into hunger and deeper poverty. While the bank claimed under pressure at its 2012 AGM that it only facilitated deals for third parties, the reality is a little more complex, with Barclays' risk-taking approach to dealing suggesting that it effectively speculates itself. They state of the Barclays Capital’s Commodities division that “Our Commodities Traders build ‘trading books’ specialising in goods from energy products to agricultural assets, all over the world.”  

As we gear up for a new regulatory model under the aegis of the Bank of England, we have to question about the direction. And we have to ask questions about the relationship between the regulators and Barclays in particular. Now that more evidence has come to light of the failings of the regulators, and their incestuous relationship with the banks they’re meant to oversee, nothing short of a complete overhaul of the banking and regulatory system will suffice.

The numbers:

Barclays

  • Fines imposed by the FSA: £59m
  • Fines imposed by US Authorities: £230m
  • Earnings from speculation on commodity derivatives: £189m/year
  • Statement from Bob Diamond at the Barclays AGM: “our traders are not involved in direct speculation.”

FSA

Board of Directors:

  • 26 of 36 members of the board linked to the Finance sector since 2000 before or after appointment
  • 9 continued to hold appointments in financial corporations while at the FSA
  • Board Directors linked to consumers or other stakeholder: 1

Meetings held with the finance sector about European Markets in Financial Instruments Directive

  • 87 per cent of all meetings held with industry bodies
  • Only 1 meeting held with a third party stakeholder

Deborah Doane is the director of the World Development Movement

FSA. Photograph, Getty Images.
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The struggles of Huma Abedin

On the behind-the-scenes story of Hillary Clinton’s closest aide.

In a dreary campaign, it was a moment that shone: Hillary Clinton, on the road to the caucus in Iowa, stopping at a Mexican fast-food restaurant to eat and somehow passing unrecognised. Americans of all political persuasions gleefully speculated over what her order – a chicken burrito bowl with guacamole – revealed about her frame of mind, while supporters gloated that the grainy security-camera footage seemed to show Clinton with her wallet out, paying for her own lunch. Here was not the former first lady, senator and secretary of state, known to people all over the world. This was someone’s unassuming grandmother, getting some food with her colleagues.

It might be unheard of for Clinton to go unrecognised but, for the woman next to her at the till, blending into the background is part of the job. Huma Abedin, often referred to as Clinton’s “shadow” by the US media, is now the vice-chair of her presidential campaign. She was Clinton’s deputy chief of staff at the state department and has been a personal aide since the late 1990s.

Abedin first met Clinton in 1996 when she was 19 and an intern at the White House, assigned to the first lady’s office. She was born in Michigan in 1976 to an Indian father and a Pakistani mother. When Abedin was two, they moved from the US to Saudi Arabia. She returned when she was 18 to study at George Washington University in Washington, DC. Her father was an Islamic scholar who specialised in interfaith reconciliation – he died when she was 17 – and her mother is a professor of sociology.

While the role of “political body woman” may once have been a kind of modern maid, there to provide a close physical presence and to juggle the luggage and logistics, this is no longer the case. During almost 20 years at Clinton’s side, Abedin has advised her boss on everything from how to set up a fax machine – “Just pick up the phone and hang it up. And leave it hung up” – to policy on the Middle East. When thousands of Clinton’s emails were made public (because she had used a private, rather than a government, server for official communication), we glimpsed just how close they are. In an email from 2009, Clinton tells her aide: “Just knock on the door to the bedroom if it’s closed.”

Abedin shares something else with Clinton, outside of their professional ties. They are both political wives who have weathered their husbands’ scandals. In what felt like a Lewinsky affair for the digital age, in 2011, Abedin’s congressman husband, Anthony Weiner, resigned from office after it emerged that he had shared pictures of his genitals with strangers on social media. A second similar scandal then destroyed his attempt to be elected mayor of New York in 2013. In an ironic twist, it was Bill Clinton who officiated at Abedin’s and Weiner’s wedding in 2010. At the time, Hillary is reported to have said: “I have one daughter. But if I had a second daughter, it would [be] Huma.” Like her boss, Abedin stood by her husband and now Weiner is a house husband, caring for their four-year-old son, Jordan, while his wife is on the road.

Ellie Foreman-Peck

A documentary filmed during Weiner’s abortive mayoral campaign has just been released in the US. Weiner shows Abedin at her husband’s side, curtailing his more chaotic tendencies, always flawless with her red lipstick in place. Speaking to the New York Observer in 2007, three years before their marriage, Weiner said of his future wife: “This notion that Senator Clinton is a cool customer – I mean, I don’t dispute it, but the coolest customer in that whole operation is Huma . . . In fact, I think there’s some dispute as to whether Huma’s actually human.” In the film, watching her preternatural calm under extraordinary pressure, you can see what he means.

In recent months, Abedin’s role has changed. She is still to be found at Clinton’s side – as the burrito photo showed – but she is gradually taking a more visible role in the organisation overall, as they pivot away from the primaries to focus on the national race. She meets with potential donors and endorsers on Clinton’s behalf and sets strategy. When a running mate is chosen, you can be sure that Abedin will have had her say on who it is. There’s a grim symmetry to the way politics looks in the US now: on one side, the Republican candidate Donald Trump is calling for a ban on Muslims entering the country; on the other, the presumptive Democratic nominee Hillary Clinton relies ever more on her long-time Muslim-American staffer.

Years before Trump, notable Republicans were trying to make unpleasant capital out of Abedin’s background. In 2012, Tea Party supporters alleged that she was linked to the Muslim Brotherhood and its attempt to gain access “to top Obama officials”. In her rare interviews, Abedin has spoken of how hurtful these baseless statements were to her family – her mother still lives in Saudi Arabia. Later, the senator and former Republican presidential candidate John McCain spoke up for her, saying that Abedin represented “what is best about America”.

Whether senior figures in his party would do the same now remains to be seen.

Caroline Crampton is web editor of the New Statesman.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad