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Perhaps the wheels of justice are beginning to grind the bankers.
Running a business which is shielded by the concept of liability being limited, not to its members, but to the capital that the members have contributed brings great privileges, because the members of the business have limited their risk and in doing so expose potential creditors to risk. If you operate a business as a human or in partnerships with other humans, you risk every last asset you own if things go wrong. If you operate through a corporation, you run no personal risk, unless you have misbehaved or acted illegally. However, you may think, that no one can be forced to provide credit to a limited liability company, but in some field of business people are cajoled, enticed and often required to provide credit and have no option but so to do. This is most apparent in the banking sector.
Workers are mostly required to open bank accounts in which their employees pay their wages. People get their state entitlements by through bank accounts. People get paid for goods and services through their bank accounts. In Cyprus recently when the banks closed, the government flew out millions of euros in notes to ensure the payment of wages of British military there. Those wages would have ordinarily been paid by the British government into bank accounts in Cyprus. The days of the paymaster carrying a chest of gold to pay the troops are long gone.
Every time you deposit money in the bank you are making a loan to that bank of the money you deposit. You become a creditor of the bank. When a bank collapses the creditors – that it to say mainly the depositors lose out, as recent events in Cyprus have demonstrated. Events in Britain nearly five years ago now would have caused millions of creditors – depositors who placed money in their bank accounts, to have lost their money had the government not “bailed out” the banks with money from the taxpayers. We are all now paying much larger taxes than necessary because we had to protect our deposits in banks with our own money. As such the “bail out” was illusory; water was not bailed out from a sinking ship into the sea, but into another sinking ship, albeit one that was sinking very slowly and might have a chance of being patched up.
What was real about the bail out of banks was that those responsible for running and managing those banks, (those banks protected by the shield of limited liability,) were never held to account for their carelessness, negligence and simple greed which has affected the lives of so many.
The wheels of justice grind exceedingly slowly. They usually do not grind those who are very wealthy and hardly ever grind bankers, except by way of example to encourage others. The Business Secretary, Mr Cable, is trying to see what can be done to ban three former directors of one bank, HBOS, from acting as directors again. It is a move that is long overdue. The directors involved in running banks that collapsed have not been held to account or asked to do more than explain themselves and suffer public contempt. Their wealth and business activity has remained untouched.
I do not know whether Mr Cable’s initiative will lead to anything. We know the wheels of justice grind exceedingly slowly, but whether they will grind fine enough remains to be seen.
Filed under: climate change Tagged: bank collapse, banking, directors disqualification, HBOS, justice, law, limited liability 
2013-04-08 01:01:06
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