So it is now preferable to be seen as an estate agent(realtor) than a banker

While Barclays' (and other banks') rigging of reported interest rates to support their own positions is clearly wrong, today's "bleat" about mis-selling interest rate swaps seems to be in another place. It reminds me of a meeting at a cocktail party a few years ago .

My father and I met the father of a friend of my cousin - got all that?. He had been, indeed still was, a Lloyds "name". These were people who underwrote financially the workings of various Lloyds syndicates, often pledging hard assets such as their homes against the potential need to meet insurance claims. Of course no "name" expected to ever be called upon to sacrifice their home, but rather to just take an additional income from an asset that would not otherwise be earning. For many years and with few exceptions this was true, so it seemed like money for nothing, but as the saying goes if it seems too good to be true it most probably is.

At this time Lloyds had started making serious losses and was calling on "names" to make good on their promises and come up with their money. This man's house was now at risk and he was bleating about how unfair it all was. He was an intelligent and previously successful man who one would expect to make informed balanced decisions, but in this case he argued that he had been duped. While he admitted that he had received healthy and welcome income for years (for doing nothing!) he argued that he had never been told he could lose his house. Yet he accepted that if he bought a property, the solicitor's searches were not an guarantee against any future problem and that the final decision to buy or not rested with him.

Now at the risk of seeming insensitive, I have to admit that my father and I felt little or no pity for his situation and I suspect showed little sympathy. In this case he was one of many thousands whose greed, came back and  bit them. We still see him from time to time and while their circumstances have change they are neither destitute or suffering from this - they just lost some money.

So back to today; on the radio was a "small business" man jumping on this latest bandwagon and complaining that his bank had mis-sold him an interest rate swap. For anyone one who doesn't know an interest rate swap is broadly an agreement whereby, for a fee, one can swap the basis of interest on one's borrowings ie if you borrow at a variable rate you could swap that for a "fixed" rate that will remain constant for the duration of the swap. This sort of certainty suits some businesses better. The reverse is also true. One of the big reasons for buying a swap is to insure/protect against higher interest rates in the future. A deal that makes sense when funded at x%, may not make sense at x+2%, so fixing at x is attractive.

The business man in question had done just that around 2006 and of course interest rates had subsequently fallen. He DID benefit from a known fixed interest rate, but had he stayed with variable interest then he would have been paying less - isn't hindsight wonderful. He was complaining that he had been disadvantaged because HE decided to buy this protection and then the world then spun in a different direction.

The radio presenter then interviewed a journalist who has looked into this "scandal", listening to sales calls and talking with clients and sales people. The journalist pointed out that the sales patter had concentrated on the positives and not spent as much time on the negatives ie in this case what would happen if interest rates fell. Now I realise that there needs to be openness and honesty in selling difficult financial products, but, quite frankly, interest rate swaps are not that complicated, so if someone can run a business this should be within their comprehension. They probably make much harder decisions.

It strikes me that a double-glazing salesman will always emphasise the positive, and not what might happen should we face hail storms of epic proportions. Similarly a car salesman will talk about the advantges of diesel over petrol as they are and not counsel on the impact on cabon-fuels prices of the discovery of a major new bio-fuel process.

Why, in retorspect, are we now demanding somuch more of financial salesmen? To me it smacks of a growing witchhunt.

I think it was topped off by some vox pop interviews in which a banker said he never admitted to being a banker but instead told people he was an estate agent. Now I never thought I would see a day when that was the preferred ranking of professions.

I wonder what tomorrow will bring?