We’re having a parliamentary inquiry into the banking scandal rather than a judge-led one. Based on what we’ve seen from previous parliamentary committees, we are unlikely to be much clearer by the end of it. As Mary Riddell put it:
Observing the Treasury select committee trying to pin down Bob Diamond on Libor was like watching a 4B chemistry set attempting to hunt down the Higgs boson.
Parliamentary inquiries are often rambling and unfocused. Just look at the phone-hacking hearings; a classic of the genre.
There are three reasons for this.
Firstly, most MPs lack forensic questioning skills. The sort of questions you need to ask to find out what really happened in a media or banking scandal are very different from those you use to score points in the House of Commons.
Secondly, MPs play to the gallery. They want to make themselves look good so they try to be clever, making silly jokes and calling people rude names. This might look good on telly and give otherwise unknown MPs their fifteen minutes of fame but it won’t get anywhere near the truth about the Libor scandal or the wider malaise of our banking industry.
Thirdly, and most importantly, they don’t work as a team. Their places on the committee are allocated along party lines and each MP comes to the table with his or her own agenda. They queue to ask questions and, because they are so busy rehearsing their own points, they rarely listen to what went before. The questioning is therefore disjointed. Even when the witness is facing tough questions, the baton is soon passed to another MP who takes the questioning off in a different direction, allowing the witness to wriggle off the hook. The lack of a team approach also means that the MPs, if they prepare for the hearings at all, do so individually. They therefore rarely mount a co-ordinated assault on the defences of those up before them.
Although it might look unfair, with the witness outnumbered by a horseshoe of MPs, parliamentary committee hearings are really a series of short, unfocused one-to-one interviews. They are a bit like those martial arts films where a dozen baddies attack the hero one at a time, allowing him to see off each one in turn.
Set against this fragmented and unfocused group of MPs will be some of shrewdest people in the banking industry. You don’t get to the top of an investment bank without being very bright and politically astute. Razor-sharp, expert in the subject matter and coached by the best lawyers, PR specialists and media trainers money can buy, they will be formidable opponents.
The whole thing will probably be a walkover.
Flip Chart Fairy Tales 
You say this like it’s a bad thing….
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You are spot on in your critique of the structural flaws of standing committees. I’d add another, which is that most of them have a remit limited to oversight of the relevant government department’s operations. This can obviously be flexed, where there is a genuine public interest, as was the case with the Culture, Media and Sport Committee’s quizzing of News International, however too often the range of investigation reflects a Whitehall-centric view of the world. They need to get out more.
As for their effectiveness and forensic capability, it’s worth noting that public perception is heavily influenced by which ones make it onto the TV news. Keith Vaz and the Home Affairs Select Committee are perhaps the most egregious example of parliamentary star-f*ckers, hence their hilarious invitation to Russell Brand to share his wisdom on drug abuse. This gives the impression that MPs are witless buffoons. The more capable committees (like the more capable testimonies, such as David Nutt on drugs) don’t tend to get the airtime.
The special committee proposed for the LIBOR scandal stands a better chance of success simply because it isn’t a standing committee. The members will come under pressure from their parties to plan and coordinate effectively, if only because looking like a bunch of amateurs when faced by shrewed bankers will not serve anybody’s interests. The real danger is that (despite yesterday’s Commons pyrotechnics) the parties will agree a compromise to focus on regulatory failure (i.e. the BBA, FSA and BoE) and keep the finance-political nexus out of it. Osborne clearly doesn’t have anything on Balls (we’d know by now if he did), but he needs a quid pro quo to avoid close scrutiny of The City’s role in party funding.
It’s also worth remembering that this will be a joint committee including peers. The latter will want to give a good account of themselves as domain experts in order to reinforce the case for a partly-appointed second chamber.
F.A.T.E. – Perhaps I was being a little unfair then. I still don’t expect much from this process though.
Parliamentary inquiries are often rambling and unfocused. Just look at the phone-hacking hearings; a classic of the genre.
The other lesson we can draw from the phone-hacking select committee hearings is that, for a big and complex scandal, they are also unlikely to be the last word. Assuming – which seems to be a pretty safe assumption – that there is more to come out into the public domain on the Libor rigging, involving other banks as well, then I suspect a judge-led inquiry is highly likely to occur sooner or later.
I think you are right John. Any attempt to kick the can down the road will blow up in the government’s face. if you’ll pardon the mixed metaphor.
You might find Simon Jenkins attempt to argue the opposite interesting.
http://www.guardian.co.uk/commentisfree/2012/jul/05/parliament-leveson-best-place-for-inquiry
Personally, I found it ill-conceived, indeed the repeated attacks on Leveson seem to me to reinforce be basic problem with a parliamentary inquiry – independence. Judicial inquiries are far from perfect, but to echo FATE, we all know that political actions, notably deregulation played a big part in bringing us to where we are now. Given that both parties have blood on their hands in this respect (much like the relationship with Murdoch) it seems like an outsider is vital if anything useful is to be uncovered.