Some of the worst events in history take place because no one is really in charge. That RBS could blunder their way into this is almost as scary as the idea that they did it deliberately. I accept it was a blunder: God knows, RBS has made enough of them already. But the banking industry should urgently review and clarify the way it handles the issue of “politically exposed persons.” No one in this country should ever again be asked about party political affiliation by their bank.
Fine prose, I think you will agree. At first I had in mind to make that first sentence there into today’s SQOTD. But think about it. To Nelson, it is obvious that nobody should “ever again be asked about party political affiliation by their bank”. Excuse me? If I am wondering whether or not to lend you money, I will ask you any questions I feel like asking, and if I don’t like the answers, then it will be no deal. If you don’t like me asking such questions, you are free to look elsewhere for the funds you want to borrow, even if I say yes. If you don’t like a bank you lend money to asking such questions, then don’t lend it to them. I am talking about the right to discriminate, both by lenders and by borrowers. Discrimination is, or should be, at the heart of banking. The attempt to drive discrimination out of banking has been at the heart of our recent banking woes.
That Fraser Nelson, a man most definitely on our side in the broad loves-capitalist-success hates-socialist-slums way that we regularly here celebrate, should write something like that, with no apparent sense of self-contradiction, tells you just how debased – how nationalised – the state of banking already is now in Britain, and has been for some while. It’s not that Nelson favours state micro-management of banks in the deliberate manner which I do agree is suggested by my heading. It’s worse than that. He just takes it for granted. His only question is: how should it be done?
Because you see, what makes this question about whether you are a “politically exposed person” scary and Soviet, which is Nelson’s point, is that the banks already are nationalised, in the sense of their databases being, you know, like that (hands brought together into a combined, intertwined, two-handed prayer fist) with government databases.
If banks operated in a true free market, banks asking about politics, or for that matter being suspected of having (and in fact having) political preferences which they make a point of not asking about, would just be stuff discussed in Which Bank? magazine. And the readers of such magazines would have plenty of banks to choose between, just as they now have plenty of magazines to choose between.
I think Fraser Nelson is closer to being right on this issue, but I don’t absolutely agee with his position on CoffeeHouse yesterday.
Your last paragraph about a time when ‘Which Bank’ magazine might make helpful recommendations is very positive thinking, and it would be a huge improvement on where we are now.
But that is not where we are.
The analogy of you lending me money and asking any questions you like does not hold good because of the assymetric power between RBS and their customers.
And the question came, more or less indirectly from the FSA, an official body.
That’s why the question about politics is unacceptable.
I am a little surprised that you think any organisation connected with the state should be allowed to increase the amount of information held on people.
Right. No-one was in charge of Nazi Germany or the Holocaust; no-one was in charge of dropping the A-bombs on Hiroshima and Nagasaki; no-one was in charge of the Cambodian killing fields; no-one was in charge of “The Great Leap Forward(Link)” or the “Cultural Revolution(Link)“, or the Iraq War and the 6 years of consequent chaos. No, sirree. Stuff happens, that’s all.
Nelson deserves more credit than you give him. First of all, he makes it clear the reason he’s worried is that the banks in question are state-controlled. Even his last paragraph, which you quote, is a call for the banking industry to reform itself, not for its political masters to intervene with more regulation.
Incidentally, this brings to mind the Alberto Gonzales and Department of Justice scandals in which federal employees were discriminated against based on political affiliations. The common problem is that the discrimination is being conducted BY state entities, rather than private individuals with no contractual obligations to the contrary (in which case the shareholders and/or customers would decide the fate of those involved).
Why should state entities not be allowed to conduct political discrimination? (a) We don’t trust it to the extent that we require secret balloting; and in the US case (b) the Justice Department is supposed to operate independently …
… but is this really the whole analysis?
Brian,
The banks aren’t asking these questions because they want to. They are doing it because a state regulator tells them to, or hints they should. If they don’t do what the FSA decides, retrospectively, it wants, they can be massively fined or shut down. Example. In fact for much of its tenure the FSA has refused to specify in advance what procedures it regards as acceptable, a classic gangster trick for encouraging fearful compliance and subordinate zeal – ‘working towards the regulator’.
This intrusion “to prevent money-laundering” is of a piece, with the War on Tax Havens(Link) that Jonathan has been highlighting on this blog for a while.
I still have a bank account I opened 24 years ago using a single £1 coin. The bank in question, then a well-known high street name, only asked me for an address “to send the statements”. For many years it was my main account, and I still use it.
The “money laundering” identification and qualification obsession began a little later, on the pretext of the War on Drugs, but actually motivated by tax-collection from the naive evader.
(The Mr Big of this narrative is least bothered by it. Compliance costs are only at the margin for him. A rich criminal who wants to bank funds will be wary enough to buy a legitimate cash business with fungible stocks, such as fast food or a florist, which proceeds to make a surprising amount of profit, or some other front-firm with dummy shareholders and directors. He can get a neat tax-record without making the slightest ripple in such checks.)
Revenue intelligence merged imperceptibly into a box-ticking industry denominated as “consumer-protection”, to the point that people in Britain and some other OECD countries have over 20 years come to expect an interrogation and production of documents to be the beginning of any financial relationship. Or even for withdrawing your own money in cash or travellers cheques.
This is now being used as an excuse for the state control of individual identity: registering for an identity card will ‘make your life easier’, the mark and the grifter alike having forgotten how life came to be so difficult in the first place.
Marc Sheffner,
No-one was in charge of Nazi Germany or the Holocaust…
Actually, yes. Most recent scholarship accepts that the Nazi state was one of authoritarian chaos. (That’s my alllusion in “working towards” above.)
I’d submit that that state is actually quite common in, and that it is a mistake to treat Hitler’s Germany as an exceptional eruption rather than as a one of the standard paradigms of post-liberal governance.
With the exception of the A-bombs, all those horrors you cite have strong features of Fuehrerprinzip: whoever was locally in charge assuming absolute power in the name of The Struggle, whose primary urgency is to be interpreted as excusing their dutiful dispensation from all previously accepted standards of behaviour, and acting as a Little God of categorical destruction.
Guy, as you know, anyone who works in financial services has to comply with a vast array of legislation to deal with issues such as money laundering. For example, a bank teller is obliged to inform the state if a person comes in and deposits a sum of cash over a certain size. If they fail to do so, they can be sacked and charged with a criminal offence. And of course since the passing of the Patriot Act and the various pieces of EU/domestic legislation, this situation has got worse.
Even before 9/11, lawyers, for example, no longer were able to treat their clients with total confidentiality. They now have to give certain information to the state if demanded. The same now applies to areas such as medicine and accountancy. The professions have been seriously compromised. While these organisations are in theory part of the private sector, to a huge extent, they are not.
This is of course common knowledge to most of us but it needs to be spelled out from time to time.
Guy,
Your nuanced statement sounds more probable than my smarmy attempt at sarcasm. Thanks for the tip about Fuhrerprinzip: 3 minutes on Wikipedia and I got more educated. I can feel my gray matter tingling… Some of those at the top who make the decisions to create “authoritarian chaos” know exactly what they are doing.
There is a particular sort of disagreement that is particularly irksome, when things are said in reply to you as if you disagreed with them all, when in fact you are well aware of them but were saying something above and beyond all that. I know that banking is horribly regulated, and that in such a world, a bank being made to ask about politics (and then cocking up how they do it) is sinister. Reading my post all the way through should have made it clear that I know this, but if it didn’t, let it be made clear now.
But let me remind you all of what I actually quoted Nelson saying. “No one in this country should ever again be asked” about politics.
Ever again.
Nelson, you see, cannot even imagine there ever being a free market in banking in Britain, ever again. Well, he probably just about can, if challenged on that very point. But such is the implausibility of this scenario that he knows he can ignore it and assume its impossibility in his commentary on the here and now. It’s this implausibility, this unimaginability, that is so depressing, and which was my central point.