3

Libor Unplugged

LONDON – Last year’s Libor scandal was a shock to the body politic in London. Despite all that had gone before, the public and their representatives were stunned to learn that bankers had systematically undermined the foundations of a global market benchmark – one with London in its name to boot – for personal gain. Britain’s Chancellor of the Exchequer, George Osborne, felt compelled to launch a parliamentary inquiry. On June 19, after a year’s work, the Parliamentary Commission on Banking Standards finally laid a large egg.

Bankers will certainly regard the outcome as what in England we like to call a “curate’s egg” (served a rotten egg by his bishop, a young clergyman, when asked whether the egg was to his liking, replied that it was “good in parts”). They will choke on the commission’s recommendation of a new criminal offense for reckless conduct that leads to taxpayer bailouts, reinforced by a new “senior persons” regime that would ascribe all bank functions to a specific individual, who would be held personally liable when things go wrong.