Crippling the banks will only make things worse It started with Barclays - but as George Osborne made clear in Parliament yesterday, it will not stop there. A joint British-American investigation has uncovered mass rigging of the Libor inter-bank lending rate, in order to prop up individual trades - or, in the case of Barclays at the height of the financial crisis, the firm itself. Such behaviour points to the existence of a banking culture in which the desire for profit was allowed to override every other consideration, whether in terms of basic business ethics or the banks" duty both to their customers and to the integrity of the financial system as a whole. As the full scale of this scandal becomes clear, there will be calls for all kinds of legislation and regulation to prevent such misdeeds. Yet there is a danger that in our haste to shove Bob Diamond and others into the tumbril, we will not only fail to remedy the situation, but will create more problems than we solve. During the recent wave of banker-bashing, it was left to a few lone voices to point out some basic truths. First, that the sector plays a crucial role in oiling the wheels of the economy: indeed, it has never been more vital to keep credit flowing. Second, that the City is responsible for jobs and tax revenues that would be sorely missed if lost. Third, that the public stakes in RBS and Lloyds make their return to health a pressing public concern. In responding to this crisis, then, it would certainly not be right to dismiss the Libor scandal as a relic of the past. Even though it took place some years ago, it fits a long-standing pattern of greedy and sometimes corrupt behaviour. But heeding the siren calls of those, from Britain or Brussels, who seek to tar the whole City with the same brush would be equally misguided. And while new regulation appears inevitable - probably via amendments to the Financial Services Bill - any list of what is and is not permitted will always lag hopelessly behind the innovation of the fiscal rocket scientists. This problem is, above all, a problem of culture - and it will only be solved when the banks change their ethos as well as their codes of practice. Given the size of the industry, and of the challenges it faces, such a process will always be fraught: the equivalent of turning round a supertanker in a thunderstorm. To that end, the best solution is not to thrust new responsibilities on the regulators who failed us before. It is to get to the bottom of this affair as quickly as possible, and for those who transgressed to face proper punishment. For bad apples to lose not just their bonuses but their jobs, and even their liberty, will remind bankers that this is about more than rules: it is about the standards of behaviour and integrity that customers - and taxpayers - demand from those who handle their money.