MPs back parliamentary inquiry into banking culture
In the wake of the Barclays rate-fixing scandal, the Commons rejects Labour’s motion for a judge-led probe in favour of a parliamentary inquiry led by Treasury select committee chairman Andrew Tyrie.
MPs voted by 330 to 223, a majority of 104, to set up the parliamentary inquiry. They refused Labour demands for a judicial inquiry, rejecting the proposal by 81 votes.
Shadow chancellor Ed Balls said the inquiry favoured by David Cameron would be “not even remotely up to the task”.
The votes on the inquiries followed an ill-tempered debate dominated by a row between Chancellor George Osborne and his Labour opposite number.
The two men clashed after Mr Osborne accused the shadow chancellor of being involved in the Libor rate-rigging scandal. Mr Balls denied any involvement and claimed Mr Osborne’s “cheap and partisan” conduct “demeans the office he holds”.
Barclays fine
Barclays has been fined £290m for attempting to fix the Libor rate and its European equivalent Euribor, which can impact on the price of borrowing money for ordinary households and businesses.
Calls for a public inquiry into what exactly has been taking place behind the scenes at the bank – as well as any other institutions which may have been involved – have emphasised that publicly funded banks should be accountable to the public that bailed them out of crisis in 2008.
Prime Minister David Cameron responded to calls for a public inquiry earlier this week by announcing a cross-party parliamentary inquiry. His proposal met with fierce criticism.
But what is the difference between a parliamentary and a judicial inquiry – and why do their respective proponents think one will be better than the other?
Read more: Is it time to switch to an ethical bank account?
Parliamentary inquiry
A parliamentary inquiry is led by a politician, whereas a judicial review is overseen by a judge.
The inquiry proposed by David Cameron would be chaired by Conservative MP Andrew Tyrie, who also chaired the Treasury select committee on Wednesday.
It would comprise peers and MPs representing the three main parties.
The government argues that the parliamentary inquiry is necessary for a speedy review of what went wrong. It hopes that the report’s recommendations, which would be made in December, will be published in time to be included in the Spring banking bill.
Judicial inquiry
Critics of the parliamentary inquiry maintain that neither the banks nor parliament will be able to conduct an inquiry into their own conduct.
They argue that a parliamentary inquiry will be unable to extricate itself from the political ramifications of the banking crisis – and that MPs will descend into what ex-chancellor Alistair Darling has described as “settling scores”.
The blame game has already reared its head following Wednesday’s Treasury select committee, in relation to the previous Labour government’s role in the Libor scandal.
A judicial review, it is argued, would not be partisan, allowing a deeper exploration into what happened, rather than being distracted by political ends.
Supporters of a judicial review believe that Bob Diamond‘s appearance at the select committee on Wednesday demonstrated that a parliamentary inquiry would have scant ability to fully investigate the banking sector.
In a three-hour sitting, yesterday’s committee of 13 MPs was unable to unearth any telling evidence from Diamond. A judicial review, its proponents argue, would provide the sort of cross-questioning necessary to a comprehensive review of what went wrong.