Libor trial(bbc.co.uk) |
Libor trial(bbc.co.uk) |
Now, I know some of you are a little skeptical about the efficacy of punishing whipping boys, but let me explain. We can't possibly whip banking executives when they do something wrong because we live in a civilized society that respects the "divine right of banking executives". Instead, we assign each executive a whipping boy and the executive then develops a strong emotional bond to the whipping boy. When the executive does something wrong, he will be forced to watch his close companion, the whipping boy, suffer for his crimes.
This will act as an effective deterrent for any future wrong doing for the executive and send a strong message to other executives their crimes might jeopardize the well-being of their own whipping boys. Some may call me optimistic, but I think this single act of justice will have the desired effect of transforming our banking system. If bank executives know they're putting their whipping boys in real jeopardy, I think that will force their hand to rethink their organization's incentive systems and institute checks and balances into their organization to reward honesty, transparency and compassion.
> The court was played a clip where Mr Hayes said he was part of a system in which influencing Libor was "commonplace", although he admitted he was a "serial offender".
Even if you only put 5% of these guys in jail, its still enough of a risk some people might choose to be honest.
Here's my concern: Employees work under incentive structures that are established by their employers and are supervised by the executive teams. When breaking the law becomes "commonplace" in a system, the people who are responsible for governing that system must be held accountable if the negligence verges on criminal.
As a society, it's critical we have a reasonable legal framework that strongly encourages executives to make sure they have effective internal controls to detect and discourage criminal activity from employees. If we don't have that, then we're effectively giving executives whipping boys who can be used to shield them from the bulk of liability.
That the (whip boy) trader was executing trades as ordered by his (master) superiors in his own name, i.e. taking all the risk, but sharing the profit?
The first criminal trial . . .
So, it sounds like there are more to come.