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UK: The Case Against Securitizing The Economy

1-Stuart J HooperStuart J. Hooper
21st Century Wire

When an issue is securitized, it demands exception and exclusion. The financial sector has proven, over the course of various criminal scandals, that it deserves neither.

Keith Bristow of the UK’s Nation Crime Agency (NCA), responsible for tackling organised crime in particular, has suggested that recent events in British banks are ‘a threat to national security. He went on to add that this is damaging the ‘reputation of the UK’ and could cause losses in tax revenue. In turn, Bristow announced details of an information-sharing agreement with banks aimed at stopping financial crime.

What is securitization?

In framing financial crime as ‘a threat to national security’, Bristow essentially securitized the economy. Securitization Theory has its roots in the Copenhagen School of Security Studies and is concerned with the discursive construction of threats. It can be seen as a failure to with deal issues through political norms, as securitization institutionalizes speed, necessary for survival, against the slow norms of everyday politics. The process of securitization takes place through what is known as a speech act, a discursive action that creates a new political reality by a speaker in a position of power identifying something as a threat; although these are not necessarily correct or required, and, furthermore, require a facilitating, historical context to be effective.

When a speaker in a position of power, such as Keith Bristow, aligns with a facilitating, historical context, such as the current HSBC banking scandal, securitization can almost be too easy of an act to perform. But, once performed, it is an incredibly hard process to go about de-securitizing an issue.

This is because of what securitization entails. Securitization suddenly makes it necessary to bypass the political process, pressure the legislature and suppress dissent if necessary. It would shield the financial sector from accountability and transparency to levels not even seen under neoliberal banking secrecy laws. It is the height of exceptionalism in politics, favouring silence and speed over debate and deliberation. Under the politics of exception, securitization abandons open and accountable governance and regards scrutiny as undesirable; due the fact that such methods would supposedly not allow the imminent threat to be dealt with in a timely fashion. Therefore, securitization can also be viewed as the politics of exclusion. While legitimizing the domination of security as an elite issue, the public realm is bullied into accepting the new, supposed threat.

Think about what it means when something is ‘a threat to national security’. After an issue is securitized, the response has to be forceful in nature. Diplomacy and deliberation are pushed aside, while exceptional emergency powers take over so force can be allowed to reign supreme. All, allegedly, in the interests of survival. There is huge potential for this concept to abused with disastrous consequences.

London has been the ground-zero of financial crime.

The case against securitization of the economy

Recall that Bristow announced an information-sharing agreement, an agreement between the NCA and dominant banks. Note that this agreement is also voluntary. We can therefore classify this new ‘national security threat’ as an attempt at agent benefiting securitization, securitization that benefits narrow concerns and maintains existing power structures and relations. This is an issue because the NCA has had its officers caught illegally attempting to gain access to secret documents and we need not list the lengthy number of scandals British banks have been involved with recently; although LIBOR comes to mind as one of the bigger crimes. Would it not perhaps be better to form an independent commission on financial crime, than allow those involved with crime to gain from agent benefitting securitization?

It is alleged that the deal will end deceptive banking practices, which is an entirely all too optimistic outlook and does nothing to evaluate the extent to which that is actually possible to do. Decades of economic globalization and trade liberalization have secured secretive banking practices in the highest global financial institutions. Professor Jason Sharman’s 2010 article ‘Shopping For Anonymous Shell Companies: An Audit Study of Crime In The International Financial System’ exposed the true extent to which banking secrecy has infiltrated Western nations. This makes securitization unnecessary, while suggesting systemic overhaul is required instead; an idea we shall return to later.

We hear that because Britain relies heavily on financial services, ‘we can ill afford the reputation of those institutions to be damaged’; therefore securitization is required. Although definitely in decline, Anglo-American financial hegemony is still just that – a hegemonic position. So, to what extent does damage to reputation matter, when those suffering the damage are already in a hegemonic position? Many actors, no matter their moral stance, are forced, de facto, into working with the hegemonic faction due to the potential for gains that may not otherwise be possible for them to achieve. This means that if damage to reputation is not an issue for a hegemonic entity, securitization is not required to prevent it from occurring.

This hegemonic position also brings up another important critique of this securitization attempt. Bristow claims that the future of the economy is in ‘jeopardy’ if banks succumb to scandals and the potentially damaging economic consequences come to pass. Anglo-American bankers, in their hegemonic position, surely have no such fear, because they know that bailouts are almost guaranteed in the event of economic crisis. Some casualties may be taken, take Northern Rock for example, but the essential architecture will, more than likely, be saved. Banks see themselves far from being in a position of ‘jeopardy’, instead, they hold a solid belief in their rescue should disaster strike; stemming from their hegemonic influence over national governments. Until that belief and hegemonic position can be shattered, perhaps with an economic ‘New Deal’ for the 21st Century, risk-taking, criminal and fraudulent activity should be expected. The belief in, and reality of, bailouts mean that securitization is not necessary, because a political mechanism, albeit highly questionable, is already in place to prevent economic catastrophe.

Bristow goes as far to suggest that banks ‘deserve some credit for taking some risk to help us target these people’, because they may suffer financial losses. There is evidence of systemic criminality at the highest levels of banking, as the recent HSBC scandal has shown, so how can we trust the same banks to help target anyone? This, again, makes securitization a waste of time in the financial sector, when the ‘elites’ who would be responsible for security are the ones committing the crimes in the first place.

There are ten banking institutions taking part in the NCA’s new scheme, yet none of them will be named because it may, as alluded to above, put them at a ‘commercial disadvantage‘. So, how will we ever have any evidence that anything has actually happened to prevent crime; will we have to believe the words of some abstract ‘official’ document that is released in a year’s time? The British government has already said it will not launch an inquiry into HSBC. This takes the politics of exception and lack of accountability, stemming from securitization, to almost unfathomable levels that should not be tolerated.

But, the most important thing to take away from that statement is that being seen as tackling crime will put you at a commercial disadvantage in the financial sector. This is evidence of a systemic, ingrained and inseparable merging of the financial sector with shameless, explicit and undeniable criminal behaviour for commercial gain. So, again, such a system cannot be allowed to gain from the politics of exception and exclusion that securitization can bring about.

It’s best to cage the viper after it grabs you by the throat.

A better response to a systemic problem

Far removed from securitization is a process of regulation. Debate and deliberation come to the fore and individuals can form long-term fixes, as opposed to the short-term fixes of securitization, on financial problems. Securitizing finance because scandals are occurring is like rearranging deck chairs on the Titanic – it is attacking the symptom, not cause, of the problem. In order to prevent scandals and supposed ‘threats to national security’ emerging from the economic sector, we should attempt to bring the sector back under the rule of law with strict regulation and enforcement. Far from exception and exclusion, the financial sector has proven that it needs regularity and incorporation. Regularity in its practices according to the rule of law and incorporation into what should be a transparent liberal democracy.

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READ MORE ABOUT FINANCIAL CRIME AT: 21st Century Wire Financial Files



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