Last week, documents leaked to media outlets around the world have confirmed something that everyone should have already known; the Swiss private banking arm of HSBC has been providing its extremely wealthy clients with advice on how to evade taxes and hide their wealth. The bank has also been accused of maintaining accounts for 140 people suspected of serious criminal activity.
HSBC’s response to these allegations has consisted of the same trite apologies and tropes that have become de rigueur in such cases; mistakes were made, the core values of the organization were compromised, reform is underway, and such things will never happen again. Until, of course, they do. After all, the banking sector is no stranger to controversy, and has repeatedly demonstrated a penchant for bending the law, if not breaking it, in its relentless quest for profit. HSBC itself was fined $1.9 billion in 2012 for laundering the money of Mexican drug barons. Standard Chartered paid out $340 million in the same year for concealing billions of dollars worth of transactions with Iran that violated sanctions imposed on that country. In July 2014, BNP Paribas, the largest bank in France, was fined $8.97 billion for violating sanctions against Cuba, Iran, and Sudan. Last year, JPMorgan, Citibank, UBS, RBS, and HSBC were penalized for rigging foreign exchange markets, and several banks, most notably Barclays, were fined for Libor rigging. The list of financial misdemeanors, large and small, goes on and on, with the fines and penalties imposed on these banks representing little more than a fraction of their total earnings.
In the wake of the financial crisis of 2007, it was hoped that the United States and Europe would take concerted action to punish and regulate the banks and financial institutions whose risky behavior had triggered the meltdown. Especially in a context where many of these banks had to be bailed out using taxpayer money, it was reasonable to expect that governments would use this leverage to enact meaningful reform. Instead, almost eight years later, it is clear that virtually nothing has been done to bring greater accountability and transparency to the financial sector. Even as people around the world continue to face uncertain economic futures and experience increasingly precarious circumstances amidst widespread budget cuts and unemployment, the banks are back to business as usual; massive profits and large bonuses abound even as myths about ‘wealth creation’ and ‘growth’, lifted directly from the 1980s, serve to once again legitimate all manner of financial excess.
It is not difficult to see why, despite the financial crisis and the various scandals that have engulfed banks in recent years, little has actually been done to rectify the situation. Since the 1970s, the increased mobility of capital, underpinned by tremendous advances in telecommunications, has led to the increased financialization of most advanced economies; even as industrial production has been outsourced to countries with cheaper labour and lax regulatory frameworks, finance capital, operating on a global scale out of cities like London and New York, has come to assume an increasingly important, even fundamental economic role. From the provision of credit to domestic consumers and small businesses, to underwriting the activities of multinational corporations rapaciously operating in the developing world, the banking industry is everywhere, connecting different nodes of the global economy together in an intricate web of arcane financial instruments and impenetrable transactions. The mantra of banks being ‘too big to fail’ is not untrue; without them, the entire edifice of contemporary capitalism would come crashing to the ground.
When considering how capitalism, in its latest neo-liberal manifestation, has contributed to widening global income inequality and declining standards of living for the majority of the world’s population, it becomes clear that radical change is urgently required. If nothing else, the moral vacuum at the heart of the financial sector should demonstrate how free markets cannot be relied upon to deliver the greatest amount of good to the greatest number of people; like all capitalist enterprises, banks are primarily interested in profit, and will do what they can, and what they must, in pursuit of this goal. After all, on a balance sheet the money of a drug trafficker or a corrupt politician is no different from anyone else’s, especially when collusion between governments and the financial sector ensures that states will take little interest in scrutinizing banks. Through financial contributions to campaigns and political parties, the presence of social networks facilitating the regular interaction of state and capitalist elites, the maintenance of a pro-capitalist ideological environment championed by policymakers and academics, and the creation of common economic interests, often at the expense of the poor, banks have been able to continuously evade attempts at greater regulation and oversight.
The fusion of corporate and political interests has always been at the heart of capitalism, and is as unsurprising as the news that banks routinely engage in unethical practices. In Europe and the United States, where whistleblowers and leaks have constantly exposed these transgressions, it is at least possible to envisage the creation of a counter-narrative that explicitly challenges the hegemony of capitalist interests. Recent events in Greece and Spain are proof of this.
Closer to home, however, the economy remains as opaque as ever, with the shadowy oligarchies and cartels at its helm remaining impervious to scrutiny. Pakistan has had its share of scandals in the financial sector (BCCI and BOP come to mind), and there is every reason to believe that the banks operating in this country routinely break and evade the law as and when they can, just like their counterparts abroad. At a time when questions are increasingly being asked about the financing of terrorism, as well as the assets of the political elite, it is imperative that greater attention be paid to the role played by Pakistan’s banks in aiding and abetting these activities and others that are detrimental to the public interest.