People calling for banking reform on either side of the ?Atlantic are underestimating the problems of enforcement. A writer on the financial news blog Zero Hedge recently ?remarked that "the Libor scandal seems to be waking people up to manipulation and fraud by the big banks." Of course, there are tools at the ready: sanctions, tribunals, a ban for life for crooked traders. But Libor was meant to be the prime glittering advertisement for the free market. Now it turns out that the whole thing is a fix -- a grimy hand all too visible. It's like the spy in Conrad's Secret Agent vowing to destroy the first meridian.
Is it possible to reform the banking system? There are the usual nostrums -- tighter regulations, savage penalties for misbehavior, a ban from financial markets for life. But I have to say I'm dubious. I think the system will collapse, but not through our agency.
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