Kate Chisholm on The Reunion

There was a scary moment on last Sunday’s The Reunion when we heard that the derivatives market has ‘exploded’ since the collapse of Barings in 1995. Banking has become more, not less, dependent on the kinds of gambling on future (i.e., virtual) values that brought down Britain’s oldest merchant bank. When Barings fell, just over $1 billion went down the drain. Now, the derivatives market is worth $1.4 quadrillion — a figure that becomes more and more meaningless the bigger it gets, wafting through the ether like a cloud of poisonous gas.

Even more alarming (you can tell that I read Cranford at an impressionable age, upon which my knowledge of banking collapses depends) was to hear Peter Norris, the man who was technically in charge of the rogue trader who brought down the bank, concluding that ‘fraud is an endemic feature of commercial life. Three to four per cent of people will commit fraud, if given the opportunity…’ But, he says, you need ‘vigilance and luck’ to deal with it; regulation alone isn’t enough.