David Cameron's announcement of a parliamentary inquiry into the professional and cultural standards of the financial sector is likely to lead to the worst of all worlds. It all but precludes a genuinely wide-ranging Leveson-style inquiry, while handing this inquiry over to some of the very people who should be investigated: the political class.

The Leveson inquiry is so valuable because it not only digs into the professional and cultural standards of the British media, it also dissects its deeply unhealthy and corrupting entanglement with virtually the entire political establishment. Would a parliamentary inquiry have brought out all that? Imagine the Leveson inquiry headed by Tom Watson or Alastair Campbell.

To his credit, Labour leader Ed Miliband has called for a Leveson-style inquiry. His reasoning was puzzling though, arguing that only an independent inquiry would "restore confidence in our financial services".

Over the past 10 months I have interviewed dozens of people working in finance in London and if I had to name one thing that this investigation did not do, it is restore confidence. External accountants explained how nobody at the major banks can have a complete overview any more – they have become simply too big. Well before RBS ran into deep trouble, IT consultants painted a truly terrifying picture of banks' software operations. Forget too big to fail or too big to rescue, IT and accountancy interviewees said. We need to talk about too big to even manage. This former IT expert asked:

"Are so-called chief information officers, the top executives responsible for IT, aware of this? I doubt if they are and if they care. They are managers, skilled in office politics, not technical experts. Most CIOs rarely stay in their post more than a few years."



Going over the 70 interviews now online here, a picture emerges of major banks whose CEO admiral is really a really well-paid PR operative, tasked with convincing the outside world that he is in charge of his fleet when in reality nobody any longer is.

A former head of structured credit described what happened when his team's trading algorithm began to produce huge losses that could sink his bank. Imagine this testimony before an inquiry, then ask yourself, would this restore public confidence?

"Most in the bank didn't understand our products. Even the risk and compliance people who were supposed to be our internal checks and balances … We began to realise that we had to teach them how to monitor us. Then there were the people I reported to, who were getting calls from the people they reported to. I learned that the people high up know just enough for the role they're in. 'Just enough' is not enough in an emergency. I would be on the phone for hours explaining to people of increasing seniority what we were doing. I realised, they don't understand, not on a fundamental level. They will not be able to spot a mistake, correct us when we fuck up, or take an informed decision."



Then consider this observation by a senior FSA regulator:

"The real threat is not a bank's management hiding things from us: it's the management not knowing themselves what the risks are, either because nobody realises it or because some people are keeping it from their bosses."



A wide-ranging public inquiry could bring out the deeply problematic scale and complexity of global banks. It could show that most banking employees do not have headline-grabbing salaries. And it could get some of those regular employees to talk about how their bank is a zero-trust, zero-loyalty environment, creating a culture of fear that makes sounding the alarm or blowing the whistle so unlikely.

Eventually, a Leveson-style inquiry into the DNA of finance would ask why politicians allowed all this to go on. It would then summon politicians as well as financial lobbyists to reveal the quid pro quos. What do Tory donors from the world of finance expect for their donations? And does Miliband really want Tony Blair to explain publicly what he does as "special adviser" to JP Morgan? The former prime minister receives a reported £2.5m a yearfrom the banking giant. Nice work if you can get it, and this is the kind of pay awaiting Cameron after he steps down. How is a former prime minister ever going to call for the break-up of too-big-to-manage banks when one such bank pays him more in a year – for a part-time job – than he could make in a decade leading the country?

A wide-ranging inquiry into the practices and culture of banking will not restore public confidence. But it will lay bare for all to see a sector where parts seem not so much out of control, but beyond it.

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