Draw Breath

If ever people need an incentive to upgrade to firefox (3?) or to Internet Explorer 7, it's the British Banking Code. As LSN news points out (behind LexisNexis's paywall), section 12.11 of the code (here, pdf) tells you, regarding online banking. that "If you act without reasonable care, and this causes losses, you may be responsible for them. (This may apply, for example, if you do not follow section 12.5 or 12.9 or you do not keep to your account’s terms and conditions.)" Amongst other things, section 12.9 says "Keep your PC secure. Use up-to-date anti-virus and spyware software and a personal firewall" and "Treat e-mails you receive from senders claiming to be from your bank or building society with caution."

Apparently this policy has been in the code for a while, although it was updated in April just gone. While no bank seems to have invoked the clauses, you can pretty much bet that they will at some stage. Which will be bad news for the elderly and the ignorant when they discover that, having been pushed out of branches to save the banks money, they are also responsible for the security of the banks' alternative offerings.

While I of course recommend ditching dodgy Windows for altogether better operating systems, and while I find it perplexing that I still get hits from people using IE6 and IE5, I do think we ought to be sympathetic with people who simply don't know how the software on their machines works and who don't read the latest missives on internet security. If fraud does become sufficiently problematic as to make banks consider invoking the responsibility clause, there's an easy solution: publicly acknowledge that the internet, Windows-style, is not an appropriate venue for financial transactions and take steps to encourage people back into branches. In other words: the banks should just swallow whatever is the cheaper alternative.

The San Francisco Chronicle has a depressing piece on the proposed solution to the sub-prime crisis. It makes a gloomy companion piece to this article from the FT in August, outlining the various frauds (criminal and not) surrounding this shoddy saga.

Unlike the Enron debacle, if this one shakes out into a full-blown crisis (as it well might), there'll be no getting away from systematic failures of surveillance, governance and the like. Or to mix a couple of metaphors, when there are more bad apples than good, you start thinking that something's wrong with the basket (hat tip to Meditations71 for passing on the SF Chronicle article).

I'm making my way through a few books at the moment and have just finished Neil Collins's The Great Irish Bank Robbery, on Allied Irish Banks and the DIRT tax. The book is one of those marvellous journalistic pieces: an easy rolicking read covering the events and (primarily) personalities behind a scandal without bothering the reader with much in the way of analysis. Given this, I don't think I'm with Shane Ross in calling the book a 'humdinger.' Still, the book does reveal the complete breakdown of governance in Allied Irish Banks throughout the late 1980s and 1990s as ambition overtook the willingness to address scandal after scandal after scandal.