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Who Will Be Our Teddy?

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When a gambler wins money in a casino, he keeps it. When he loses money in the casino, he loses it. And when he is caught cheating? He's roughed up by the bouncers - at the very least - and barred from the casino for the rest of his miserable life. This is why the phrase 'casino banking' must surely be added to John Rentoul's infamous banned list.

Because when a banker wins, he gets millions. When a banker loses, he gets millions. When a banker is caught manipulating the stakes to his own advantage? He hands over a fraction of the winnings and keeps right on. This is not a casino, friends, casinos are fairer.

Barclays bank - one of the biggest rollers at the top table of international finance - manipulated the Libor rate - the cost of borrowing between banks - to privilege themselves and to hide their true position from both the market and the regulators. It was the equivalent of fixing the roulette wheel so that it always lands on your chosen colour. And this was no victimless 'crime'. Thousands of small businesses, the producers and the makers of our economy, were disadvantaged and left paying artificially high interest on their loans. How many were sunk by this we may never know.

Let us be clear about what this behavior amounts to. It is not the 'recklessness' that we are so used, in our post-2008 world, to hearing about. This is not incompetence or false-confidence. Rather, this is, in my opinion, akin to gangsterism. This powerful mob of secretive spivs used their unearned influence and wealth to enrich themselves to the disadvantage of others.

How did they - and the other banks who will surely follow them into negotiated settlements with the FSA - get away with it? Simply, predictably, they were able to practice their abuse because they are a monopoly. Not, perhaps, in the technical sense of single-company market share. But the bankers are a monopoly by virtue of the small number of players, the tiny range of options to consumers and the protectionist practices that keep new blood out. And those at the top of these lucky few institutions wine, dine and mix with one another, they swap jobs, they sit on each other's remuneration committees and boards. Like the mafia families of New York lore, their affairs - personal and professional - is so intertwined as to make them - in reality - one business, not many. They are a class interest which exists, first and foremost, to serve itself.

I am a lover of capitalism. It has brought to this country wealth, liberty and stability and is unrivaled as a system of economic governance. But this is no more capitalism than it is a casino. This is monopoly. And as any true conservative knows, monopoly is as great an enemy of capitalism as are Sovietism and Fascism. Monopoly closes markets. It shuts out entrepreneurs. It leads, as night to day, to oligarchy and abuse. What we need now - if we are to truly free ourselves of the spivs and gangsters - is a full-blooded crusade for capitalism and against monopoly. We need a modern Teddy Roosevelt (by far the better president produced by that great family) to declare that war and to carry it forward. The prime minister can be that leader, if he so chooses, and in so doing he can live up to the rhetoric of his 'responsible capitalism' agenda. He could start, in the coming weeks, by quoting directly and at length from the man who should be his role model - "We can do nothing of good in the way of regulating and supervising these corporations until we fix clearly in our minds that we are not attacking the corporations, but endeavoring to do away with any evil in them. We are not hostile to them; we are merely determined that they shall be so handled as to subserve the public good. We draw the line against misconduct, not against wealth." And then he can carry forward that promise by radically opening-up banking to new blood, breaking up the biggest and most predatory players and by using the state to safe-guard capitalism against their monopolistic practices.

Only a concerted attack on the evil in our banking system, on its aggregated and unjustified power and on its venal corruption, will give us the responsible capitalism that we deserve. The prime minister must fight for true capitalism. Else the gangsters will surely win.

Around the Web

Barclays.com - Home

Barclays - Wikipedia, the free encyclopedia

Barclays PLC. News - The New York Times

Barclays Settles Regulators' Claims Over Manipulation of Key Rates

Barclays must face criminal investigation, Ed Miliband says

Markets nervous ahead of EU summit; Barclays tanks after fines

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Barclays May Implicate Other Banks, Pitt Says