On June 27, Barclays PLC was fined a monstrous £290 million ($451.14 million at the time) after its traders had submitted false data used to set the LIBOR (London Interbank Offered Rate) and the EURIBOR (Euro Interbank Offered Rate). These rates are used to set the values for derivatives and other financial products across the globe. Almost immediately, the bank was hit with harsh criticism from the public and politicians alike. Calls were made for Bob Diamond and Marcus Agius, the bank’s CEO and chairman, respectively, to step down.

The issue at hand must not concern only retribution, but prevention as well. Politicians like British Prime Minister David Cameron, Chancellor of the Exchequer George Osborne and Shadow Chancellor of the Exchequer Ed Balls were all focused on forcing the hand of Barclays instead of finding out why such egregious offenses were committed despite heavy regulations.

What followed the scandal was a time-consuming affair. It was a witch-hunt that roused the public in a way only sordid tabloids can. Some opportunists clamored for accountability in the form of forgone bonuses and lost jobs while others, namely Osborne, seized the opportunity to smear Balls. These reactions are all somewhat reprehensible given the UK’s regulatory framework is ineffective and it is in a double-dip recession for the first time since 1975. In fact, Sir Mervyn King, governor of the Bank of England (BoE), recently cut the growth outlook further.

It seems to me anyone can see there are more pressing issues at hand. The government is placing secondary issues before primary issues – the cart before the horse. What is of paramount importance at such a time is fostering growth while respecting private property rights and revamping regulators to augment efficiency. What is not of utmost importance is going to great lengths to vilify and demonize individuals who are the public’s villains of the day without any semblance of due process, especially while there already is a system to criminally prosecute such individuals.

This scandal has shown us the massive amount of much-aggrandized regulation being lumped upon the financial sector merely as a way to appease someone or the other. Finance is one of the most regulated sectors and yet such blatant and unimaginable manipulations have occurred.

Regulatory bodies risk falling from status. We need incentives to follow regulations in order for regulators to do their jobs and for regulatory bodies to be set up so they are held accountable for misfeasance on their part.

On another note, Boston University’s Dr. Laurence Kotlikoff proposes an efficient method of regulation in his book “Jimmy Stewart is Dead: Ending the World’s Ongoing Financial Plague with Limited Purpose Banking.”  He feels a single regulatory body should be set up, obviating the need for your other ramshackle overseers such as the United States Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Financial Industry Regulatory Authority, etc. This way, we have a more transparent, streamlined and efficient system that can, in theory, hold transgressors accountable and save us from the occasional omnishambles.

In a surprising aside, Paul Tucker, the deputy governor of the BoE, allegedly asked Diamond to ensure the banks’ LIBOR rates were fiddled with. Since the allegations surfaced, Tucker has made his case during questioning from members of Parliament. Yet, the fact still remains something untoward could have been afoot between banks and the BoE. One would do well to keep in mind the Royal Bank of Scotland, Lloyd’s and HSBC are also being investigated with respect to similar matters. What is interesting is instead of streamlining financial regulation, Osborne is looking to increase the regulatory outlook of BoE, placing much power in the already powerful central bank. With events threatening to drag the bank close to the scandal, it remains to be seen how effective the chancellor’s efforts will prove to be.

This column has harangued its readers on multiple occasions about the importance of compromise and finds risible the concept that a particular wing of the political spectrum is “correct.” On one side we have those who despise large bonuses, bankers and financial complexity, and on the other we have those who repudiate luddites, regulations and interference, both sides separated by a figurative chasm. Financial scandals are casus belli and subsequently, reasoning and rationality are lost in the quagmire of illogic, unsound arguments and blustering, red faces. What the people as well as those who have been elected must remember is that the debt crisis is simmering as the European Central Bank (ECB) hesitates to take action and as Germany and its Bundestag dither and confirm that they are loth to pick up others’ bills. It would be exceedingly prudent if Britain took heed and focus on growth in a proactive manner instead of lashing out.

Nikhil Rao is a Collegian columnist. He can be reached at [email protected].