The news that Swiss bank UBS has been fined nearly £1 billion for fiddling the Libor and Euribor rates is the latest in a rash of decisive rulings against the financial sector for corrupt behaviour. This follows the £290 million fine levied against Barclays for similar crimes as well as the £415 million penalty awarded against Standard Chartered for breaking sanctions against Iran let alone the £1.2 billion fine slapped on HSBC for money laundering. This is the closest thing we’ve had to a run on the banks for many years.
Many in the banking community have accepted the need for radical reforms of their institutions in the light of these fines and in their desperation to restore some credibility to banks given the public’s view that they were largely to blame for the great crash of 2008.
So, for example, the former City minister Lord Myners has called for the splitting up of British banks while there is a strong lobby in the US led by former Fed chairman Paul Volcker advocating a return to the Glass-Steagall restrictions that were designed to separate commercial and investment banking (and that were repealed during the deregulatory heyday of the 1990s). A 128 page report from the German Berenberg Bank supports a break-up of European investment banks while even the notoriously free market Wall Street Journal has called for ‘a Congressional plan either for allowing large banks to fail or for breaking them up.’
For the US economist Nouriel Roubini, one of the few to predict the 2008 crash and ensuing recession, it’s not enough just to tackle the activities of a small number of bankers, you have to confront the system itself. ‘The incentives of the banks is still to cheat and do things that are either illegal or immoral.’ In the context of a culture of law-breaking and immorality, he argues that the only way to challenge this ‘is to break up these financial supermarkets.’
How is this relevant to the situation that the UK news media find itself in? The BBC has just been lambasted for its shelving of a Newsnight report into allegations of sexual abuse involving its former presenter Jimmy Savile. Nick Pollard’s report highlighted the micro-management and over-bureaucratisation of the corporation’s news division but found no evidence of a corporate cover-up. The BBC desperately needs to open up its decision-making and governance structures but at least it cannot be accused of attempting to bury the bad news.
Lord Justice Leveson, on the other hand, has recently published a 2000 page report, following a year-long inquiry brought about by the phone hacking crisis, that excoriates the behaviour of the press, accusing it of ‘wreaking havoc with the lives of innocent people’ and of repeatedly declining to investigate its involvement in accusations of criminal activity.
How have ministers and the press reacted to this? By calling for sustained action to shake up the industry and make sure that newspapers clean up their act? Certainly not. Instead, they have spent most of their time organising systematically to undermine Leveson’s key recommendation for a new, independent self-regulator audited by a body rooted in law.
So where are the voices arguing for a more decisive form of action and to move beyond addressing not just the players but the system as a whole?
Well, there has been no shortage of people calling for the break-up of the BBC— from conservative blogger Guido Fawkes to openDemocracy’s own David Elstein and from SNP leader Alex Salmond to the Daily Mail’s editorial page which recently asked whether the BBC is ‘simply too big for its own good?’. Strangely, no such critique has been launched against the ‘behemoths’ of print culture by its own residents.
Labour leader Ed Miliband did make a popular speech in July 2011 when he called for the dismantling of the Murdoch empire but he has failed, thus far, to pursue this course of action. Former prime minister John Major gave evidence to the Leveson Inquiry calling for ownership limits to protect media plurality but Leveson declined to follow this up and, indeed, failed to make any recommendations at all along these lines.
Yet, just as British banking is still dominated by the ‘Big 5’ retail banks, we have three news organisations in the UK that control 75 per cent of daily circulation, two groups which account for over 50 per cent of commercial radio listening hours and a single operator, BSkyB, by far the largest broadcaster in the country, with an effective monopoly over pay television.
If nothing is done to break up this kind of unaccountable market power inside the media, then we will continue to fall short of the diversity of voice that we need for a democracy. In all likelihood, we will also see more examples of phone hacking, blagging and intrusion that persists in a system that puts ratings above responsibility and the prolonging of a culture of impunity in some newsrooms that has long been fostered as a result of their size and influence.
Those of us in groups like the Media Reform Coalition and Avaaz who have identified concentrated private ownership as a barrier to a responsible and plural media will continue to press for the ownership caps and public interest obligations hat we believe are key to the UK news media winning back credibility amongst the public.
If there are strong voices from within the financial sector calling for serious reform of the banks, why is it still so unthinkable for leading voices from within government and the industry to call for the break-up of media empires?