The Great Debate UK
– Peter Thal Larsen is a Reuters Breakingviews columnist. The opinions expressed are his own –
Britain’s bankers were already braced for an uncomfortable election. But the U.S. fraud allegations against Goldman Sachs, combined with the rise of the Liberal Democrats, have given bank-bashing renewed impetus. The popularity of the attacks means they could resonate well beyond the current campaign.
The immediate focus is on Goldman. Though fraud charges against the Wall Street bank were filed in the United States, one of its alleged victims was Royal Bank of Scotland, which lost $841 million on toxic debt securities sold by Goldman shortly before it was bailed out by the British government in the autumn of 2008.
The UK’s Financial Services Authority has launched its own, belated, investigation into the affair, and opposition politicians want the government to ban Goldman as an adviser. The bank’s first-quarter earnings, due to be published on April 20, could also revive the controversy over bonuses. This would be bad news for all investment banks.