It beggars belief

| 20/02/2009

It appears that (yet another) UK Government appointed team is due to arrive shortly with a mandate to probe Britain’s contingent liabilities and the likelihood of the damage to London’s international reputation resulting from financial activities here.

The suggestion that Britain has any contingent financial liability for what happens in Cayman is a shibboleth invented by Tony Baldry (a Conservative Government junior minister more than a decade ago as a justification for the UK waving the big regulatory stick at Cayman). Anyone who believes this shibboleth should read Acts chapter 9, verse 18 in light of the predictable refusal by the UK to foot the bill for any of the recent investigations and enquiries instigated by those who are irritatingly not accountable to the elected Government or to the voters here.

The related suggestion later in the article that the Cayman Government might be required to bail out financial institutions based here raises the perilous issue of moral hazard. The indirect assistance to Cayman General after Ivan (by Government taking a haircut on its damage claim) was as near to a bail out as Cayman should ever come, and will hopefully never be repeated.  Our Government cannot afford to and should not bail out or even contemplate committing to bailing out anyone. And we should fiercely resist any call from UK for that commitment.

The suggestion that London’s international reputation as a financial centre has been  or could be tarnished by events in Cayman rings even more hollow. For starters, our local banking institutions could teach the likes of the Royal Bank of Scotland, Lloyds and Barclays a few things about responsible and prudent mortgage lending. Followed smartly by reminding the British Government of the recent damning OECD report on Britain’s lack of commitment to fighting international corruption.

We should treat the latest initiatives from the UK with as much cynicism as the invective coming out of the USA. They have little to dowith good regulation and good governance. They have everything to do with anti competitive behaviour. We must indeed take them very seriously and take steps to improve our defences, but we should be under no illusions as to what they are all about. 





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