Bankers in the Dock or just another show trial

The functioning of a select committee questioning is one of the great anachronisms of the UK parliamentary system. A committee of assorted politicians, usually unqualified for the committee to which they are members, sits in mock court session to intererrogate those they want to bring before the public gaze. The sketch writers for the daily newspapers have a field day - the politicians express moral outrage at what went on, and ask what went wrong and whether the bankers are "sorry", as if that is the most searching and searing of questions. The bankers feign remorse for the mess they've put us all in, and everyone goes home none the wiser as to what's been going on, or who is really going to pay for hundreds of billions in bank bailouts and assorted political largesse.
"We are profoundly, and I think I would say unreservedly, sorry..." said Lord Stevenson, former Chairman of the disgraced HBOS, last week. So that's ok then! They are all sorry for what happened, so lets move on then.
Richard Fuld, the now unemployed former head of Lehman Brothers sitting in front of the US equivalent of the UK Select committee, to Congress last October 6th, set out the defacto approach to such proceedings. Fuld said he "took full responsibility" for the bankruptcy of Lehman's and felt "horrible" about what happened. He defended his $484 million in salary fully aware that he was walking away from the disaster he and his colleagues oversaw at the bank. Without any personal liability for the 20 or 30 times leveraging of their balance sheet assets, the enormously risky bets they were taking nor the hundreds of thousands of derivative contracts which remain outstanding, Fuld could happily brush aside most questions. Yet, being sorry for the Bank collapse (its failure to gain a Treasury bailout) didn't stop their executives from endorsing $20 million in ‘special payments’ for departing senior executives only days before the final nails were hit into the Lehman coffin.

Of course these executives (in the UK and US) really have no responsibility for their gross failings. They have gambled and won for several years in a bull market and lined their pockets accordingly. Now in a massive depression, that they have played no little part in driving (via the enormous run up in credit over the past 10 years), they can merrily walk away from their failure and enjoy their retirements with the many millions they have taken in the past few years. Simon Carr writing in the Independent took a different view, suggesting that these executives should pay for their failings with their "houses, their Bentleys and their childrens exclusive school places". However, via the ridiculous provisions of "limited liability" this will never happen, as these executives - no matter how senior - really have no responsibility for their actions. Unless they break the (admittedly weak financial laws) they will not be held to account for any contracts and commitments. Their failed companies are liable only to the extent of their relatively small initial capital positions.

This is unlike the Islamic injunctions where the owners/partners of any company remain liable for losses even after a company has failed. The establishment of real accountability for actions, rather than merely a potential curtailment of bonuses, or worse the mere demand for a public apology, provides a level of sobriety to the trading and business practices of company executives.

“O you who believe!, fulfill your undertakings” [Al Maidah 5:1]

These show trials are only put on to deceive the public away from the failings of the system (capitalism) itself. Someone has to be seen as the “fall guy” and the deposed bank chiefs are useful candidates for that purpose. It is not an individual failure that they represent, but a wholesale failure of capitalism. The ideology that they are the leading advocates for, and which they gratefully led and implemented.

Jamal