Will 'Lie-borgate' confound SNP's independence policy?

Will SNP policy of keeping UK regulators post-indpependence in light of the
Libor scandal? IMAGE: STOCKPIX.EU

Scottish independence: Will Lie-borgate confound SNP independence policy

With senior bankers, politicians and regulators all being dragged into the Libor scandal it is as yet unclear how the revelations - over what appears to be an epidemic of fraud - will impact on the UK's body politics.

One curious aspect of the story is how the "Lie-borgate" revelations will impact on Scotland's independence referendum campaign.

It seems like an open goal for the SNP who can ask the electorate why a Westminster-City axis mired in corruption can be deemed preferable to an independent Scotland.

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However there is an awkward question in this UK "cesspit" of corruption for the SNP: Why on earth would an independent Scotland want its currency and banks to be regulated by these UK institutions which have now fatally undermined the UK's global reputation as a respectable financial hub?

Finger pointing abounds. The Tories are drawing in Gordon Brown, Alistair Darling and Ed Balls who were the head Treasury honchos of the last Labour Government when the interest-rates fixing started. However, none of this has come to light since the Tories themselves came to power.

Equally, now that the Bank of England is being fingered they are distancing themselves from banking chiefs who all say they are sorry and how did all this escape the notice of the Financial Services Authority anyway?

If there was a moment for the SNP to open up a policy review on what Scotland's currency should be and which institutions should regulate Scotland's banks and currency this impasse - which will surely deepen and widen - presents a propitious opportunity.

Who could blame the Scottish Government for abandoning its sterling policy now? If it doesn't then how can it simultaneously demand the investigations which Scottish citizens deserve into this scandal and at the same time maintain a policy whereby those implicated would have a key regulatory role in an independent Scotland?

Perhaps now is the time for the Nationalists to change tack, drop 'indy light' and embrace full independence?

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Showing 12 reactions

Alexander Porter commented 2012-07-08 12:23:08 +0100 · Flag

I do indeed agree with that. What is not optional is that we should demand probity and accountability in public life if we value democracy. I guess it goes back to the titanic metaphor – when the ship is going down you don’t wait for the outcome of an inquiry or if you do no-one’s going to take you seriously.

Personally, I view the Libor and related matter as a national emergency. It appears the population is in some kind of trance. We are at a high risk of a financial sector collapse and economic meltdown. Now is not the time to wait for a rigged parliamentary inquiry before reviewing the policy of keeping a currency which is fundamentally flawed and at this time dangerously situated. What we need is leadership not focus group paralysis.

Alexander Porter commented 2012-07-07 17:11:57 +0100 · Flag

Hi Peter, interesting points.

If this were a minor matter then I would tend to agree with your more procedural view.

My own view is that the SNP doesn’t have to be seen to support the parliamentary inquiry. They would carry public support by declaring it insufficient and conducting a policy review.

The stark reality is that the whole world knows UK PLC is broke and fundamentally corrupt (with litigation now pending internationally) and so it will be impossible to defend existing SNP policy with any credibility. I mean any serious party should take the view that the police should be investigating the Government and regulators and distancing themselves from the current Government which is implicated in the scandal.

What adds to the pressure to act competently is that setting up an independent monetary apparatus takes time and may be required in urgent circumstances. A failure to act now will be viewed as negligent.

Deference to Westminster at this time, in my view, would be a serious error of political judgement.

Leaders do not react to events, they shape them. You could not find a better opportunity to show that the SNP is capable of the kind of leadership a fledgeling state requires.

They stuck to the euro long after it was clear to many that that currency was fundamentally flawed and those of us who criticised it were pilloried by their ultra-loyalist online fans. Now they are setting a trap for themselves with sterling. Neither did they see Libor coming when many knew the financial sector was insolvent and corrupt. All because of focus groups instead of economic reasoning.

All analysts will tell you now the euro-zone isn’t working because currency union requires political union. Current policy is contextualised by the euro collapsing and it is right in front of everyone’s face yet we are expected to suspend reality and believe current policy is credible. It’s all unfortunate and embarrassing.

Alexander Porter commented 2012-07-07 15:07:36 +0100 · Flag

Hi Peter, I would agree with you were it a judicial inquiry. A parliamentary inquiry will do nothing to restore faith in a system which is clearly – for the entire world to see – riddled with corruption and entirely insolvent.

Waiting for the outcome of a rigged inquiry will not encourage influencers to believe that the SNP is ready for leadership of a new nation state – that would be a real disappointment. A review now would send out the signal that the SNP are competent and Scotland is right to want out of a failing state.

Alexander Porter commented 2012-07-07 14:06:59 +0100 · Flag

I agree with Peter. The argument that the BoE can be trusted to honestly control Scotland interest rates and regulate our institutions died last week in the midst of the Libor scandal. The final nail was when Cameron refused a public enquiry.

It is a great relief for those of us who knew about the scamming before the Libor scandal broke for commentators to finally be catching up.

Surely now the SNP will review their policy. Surely?

Edward Means commented 2012-07-06 20:19:34 +0100 · Flag

Peter Bell – Thanks very much for your very helpful response to my question. Best, Ed Means

Bob Duncan commented 2012-07-06 15:24:52 +0100 · Flag

Peter,

I share your unease regarding the suitability of current UK institutions, such as the BoE or FSA, and the effect their shared use may have on confidence, both that of the money markets and that of the Scottish people. The SNP’s recent announcement of regulation of Scottish banks being given over to these bodies may well have become a hostage to fortune, in just a couple of weeks.

However, I don’t yet see the latest revelations of dodgy dealing in the banks as having killed off the currency. They seem to speak more to the state of bank regulation in London and the culture of international banking, particularly âinvestmentâ banking.

The conclusion would seem to be : Yes to currency Union, No to UK responsibility for regulation of Scottish Banks. And negotiations would need to stress the protection of our interests from the worst excesses of the city.

Also, the key word if transitional, as you have stated yourself.

Edward Means commented 2012-07-05 19:42:38 +0100 · Flag

Hello Peter – Thanks for your response to my comment a day or two ago. You wrote: “…the misconduct also pervades the Bank of England and perhaps even the Treasury…” Can you give me a reference to the Treasury’s possible misconduct? It could be a really powerful support for independence. Thanks.

Bob Duncan commented 2012-07-05 17:12:40 +0100 · Flag

Given the growing body of evidence supporting the view that a currency union woul be at least as beneficial to England as to Scotland ( see: http://www.newsnetscotland.com/index.php/scottish-economy/5325-uks-balance-of-payments-would-double-without-scotland ), I feel that post- independence negotiations are the correct time to get into the details of bank regulation etc.

We may be forced, by further deterioration of the UK position, to change policy earlier but if not we should wait until 2015 to finalise sich matters.

Jim Campbell commented 2012-07-04 08:34:55 +0100 · Flag

It always was a single question. – It is YES for independence.

Edward Means commented 2012-07-04 00:40:35 +0100 · Flag

There is no reason the regulatory malfeasance cannot be corrected within a year, so there should be no reason at this time for the SNP to drop consideration of sterling.

Vincent McDee commented 2012-07-03 15:05:00 +0100 · Flag

Is honchos not haunchos, but accurate nevertheless, as positions in both the Bank of England ant the top private Banks have been a two way road “in illo tempore”.

Alexander Porter published this page in News 2012-07-03 13:11:00 +0100