The curious case of Standard Chartered

And another bad week for banking.

This has been another bad week for the banking industry. For all that some sections of the media will enjoy presenting the allegations against Standard Chartered as the latest example of greedy bankers putting financial interests before ethics or morals, this episode feels more nuanced

That it involves the self-proclaimed "boring bank" Standard Chartered, previously praised by myself and several much wiser industry experts for its prudence and caution through boom and subsequent financial crisis, is unexpected. That it involves a UK bank allegedly consorting with drug dealers, terrorists and Iranian militants seems even stranger. So what does this episode teach us about the state of banking?

1. The banking industry is no longer held in high regard. Had the allegations been made against a firm in another industry or profession there would have been genuine shock as well as outrage. But we appear to have reached some kind of greed fatigue when it comes to bankers. The only surprise at this latest revelation was that it involved a bank formerly thought to be above the rest. Standard Chartered’s reputation (not to mention its share price) has taken a hit and will take a while to recover.

2. International finance is extremely complex. This is easy to believe because it’s only when a fresh scandal breaks that some new complexity of the financial system is revealed. Very few outside the Square Mile knew a collatoralized debt obligation from a credit default swap before the 2008 financial crisis. Some within the City (including senior figures) struggled to explain them even when they’d turned bad and taxpayers were footing the bill. Every awkward revelation since has unveiled a bit more complexity. One reason ex-Barclays CEO Bob Diamond gave little away to the Treasury Select Committee was because they didn’t know enough of the detail. A simple question from Bob about which Libor rate they were referring to would have stymied most of the committee. Very few people understand enough to take bankers to task. Regulating and overseeing this complexity is tough. It’s hard to even begin to guess where the next scandal will be, what fresh villainy it will reveal and what new complexity will be uncovered. We need banking legislation that can cover what Donald Rumsfeld would call the unknown unknowns.

3. We need prudence back. It became something of a comical phrase after Gordon Brown first wore it out as chancellor and then abandoned it when the sums got tricky. But effective regulation of banks requires prudent valuation of their complex financial dealing and of assets and liabilities. It used to be an essential element of all accounting best practice, but has been increasingly forgotten as modern standards (including IFRS) place the emphasis elsewhere. More thorough auditing and prudent valuation of all banking activities would be a sensible start.

4. We need banks to exercise self-control. It’s obvious that current systems for regulation haven’t worked. While some changes are taking place on a national level, there is still not enough international co-operation. On the plus side, the most recent scandals have come to light as a result of regulators investigating and reporting on alleged bad behaviour. But it’s a slow process and is all too retrospective. As always, financiers are innovating ahead of regulators. Bankers hate the idea of introducing excessive regulation on financial markets. And it wouldn’t help the world economy. But they have to show that the financial services industry can take responsibility for its own actions. We don’t need more regulation, but we do need better, more effective regulation. This requires better internal auditing, stronger compliance regimes and more self-control on the part of the banks. To use Diamond’s phrase, we need more banks with a culture where people behave ethically when no one’s watching.

5. Regulators are also subjective. One of the problems the Standard Chartered case has highlighted is that the complexity, power and importance of banking itself means that banking regulation must also be highly complex. It also attracts the attention of some who would seek to use the potential power for other means. The focus of the Standard Chartered allegations on dealing with Iran has led some observers to suggest the claims serve a wider political purpose in the US. While it’s not clear what that purpose might be, other than rubbishing London at the expense of New York, the claim highlights how national best interests are rarely aligned with either individual commercial goals or the wider global good.

6. It’s time for an international banking amnesty. With each revelation of wrongdoing we learn something new about the banks and something depressing about our society. We should waive further fines or punishments if all the banks agree to sign up once and for all to a thorough and totally transparent immediate assessment of all of their books. Like some sort of one-off super-audit, it would allow them to own up now to all the things they would normally like auditors and regulators not to see. We need to know where all the bodies are buried, right across the system.

This article first appeared in economia.

Standard Chartered. Photograph: Getty Images

Richard Cree is the Editor of Economia.

Shaun Botterill/Getty Images
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All the Premiership teams are competing to see who’s got the biggest stadium

It’s not just a financial, but a macho thing – the big clubs want to show off that they have a whopper.

Here in NW5, where we live noisily and fashionably, we are roughly equidistant from Arsenal and Spurs. We bought the house in 1963 for £5,000, which I mention constantly, to make everyone in the street pig sick. Back in 1963, we lived quietly and unfashionably; in fact, we could easily have been living in Loughton, Essex. Now it’s all changed. As have White Hart Lane and Highbury.

Both grounds are a few metres further away from us than they once were, or they will be when White Hart Lane is finished. The new stadium is a few metres to the north, while the Emirates is a few metres to the east.

Why am I saying metres? Like all football fans, I say a near-miss on goal was inches wide, a slow striker is a yard off his pace, and a ball player can turn on a sixpence. That’s more like it.

White Hart Lane, when finished, will hold 61,000 – a thousand more than the Emirates, har har. Meanwhile, Man City is still expanding, and will also hold about 60,000 by the time Pep Guardiola is into his stride. Chelsea will be next, when they get themselves sorted. So will Liverpool.

Man United’s Old Trafford can now hold over 75,000. Fair makes you proud to be alive at this time and enjoying the wonders of the Prem.

Then, of course, we have the New Wembley, architecturally wonderful, striking and stunning, a beacon of beauty for miles around. As they all are, these brave new stadiums. (No one says “stadia” in real life.)

The old stadiums, built between the wars, many of them by the Scottish architect Archibald Leitch (1865-1939), were also seen as wonders of the time, and all of them held far more than their modern counterparts. The record crowd at White Hart Lane was in 1938, when 75,038 came to see Spurs play Sunderland. Arsenal’s record at Highbury was also against Sunderland – in 1935, with 73,295. Wembley, which today can hold 90,000, had an official figure of 126,000 for the first Cup Final in 1923, but the true figure was at least 150,000, because so many broke in.

Back in 1901, when the Cup Final was held at Crystal Palace between Spurs and Sheffield United, there was a crowd of 110,820. Looking at old photos of the Crystal Palace finals, a lot of the ground seems to have been a grassy mound. Hard to believe fans could see.

Between the wars, thanks to Leitch, big clubs did have proper covered stands. Most fans stood on huge open concrete terraces, which remained till the 1990s. There were metal barriers, which were supposed to hold back sudden surges, but rarely did, so if you were caught in a surge, you were swept away or you fell over. Kids were hoisted over the adults’ heads and plonked at the front.

Getting refreshments was almost impossible, unless you caught the eye of a peanut seller who’d lob you a paper bag of Percy Dalton’s. Getting out for a pee was just as hard. You often came home with the back of your trousers soaked.

I used to be an expert on crowds as a lad. Rubbish on identifying a Spitfire from a Hurricane, but shit hot on match gates at Hampden Park and Ibrox. Answer: well over 100,000. Today’s new stadiums will never hold as many, but will cost trillions more. The money is coming from the £8bn that the Prem is getting from TV for three years.

You’d imagine that, with all this money flooding in, the clubs would be kinder to their fans, but no, they’re lashing out, and not just on new stadiums, but players and wages, directors and agents. Hence, so they say, they are having to put up ticket prices, causing protest campaigns at Arsenal and Liverpool. Arsène at Arsenal has admitted that he couldn’t afford to buy while the Emirates was being built. Pochettino is saying much the same at Spurs.

It’s not just a financial, but a macho thing – the big clubs want to show off that they have a whopper. In the end, only rich fans will be able to attend these supergrounds. Chelsea plans to have a private swimming pool under each new box, plus a wine cellar. Just like our street, really . . . 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle