Vince Cable in the New Statesman:
Banks should either surrender their protection and compete like other firms, or be protected and have their profit regulated like utilities.
And since there is not a bank that is not benefiting from pubic guarantees right now, there is only one answer, which is profit regulation.
For those who wish to break free a UK Glass Steagall Act should provide that option. But woe betide those who invest in them: there will be no safety net.
Why the heck can’t the Treasury get this? And Alistair Darling too?
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The City is getting away scot free with a taxpayer-funded return to business as usual as soon as possible, and the British Govt is the culprit in undermining world efforts to re-regulate the monster.
We wring our hands and wonder why Brown & his clique close their eyes to all the evidence and their ears to the good advice of people like Vince Cable and yourself, Richard.
It seems inexplicable. But if we hypothesise corruption, then we suddenly generate a lot of explanatory power. Brown is out on his ear in 11 months time, a widely reviled and disrespected figure. This seems unjust to him. Who out there will give Brown the safe haven, respect, and comfortable living he considers his fair due for his years of public service? Only the big banks, on condition that they remain unmolested by him in his last 12 months. Particularly RBS, that pillar of the Scottish establishment, who will be Brown’s only friends in the world after he loses office.
These explanations may be banal, but Brown is a banal guy – he’s had too much benefit of the doubt as to what kind of man he is. What he does is perfectly clear, and on that he must be judged.
I predict a comfy seat on the board of the re-privatised RBS within 2 years of his exit from No.10.
Strategist
If Blair is a precedent there is nothing to fault in your logic
Richard
Why doesn’t Brown get it?
My own cynical view is that he reckons the city can boom again within 6-10 months, prompting rapid economic recovery, for which he can claim credit, and get re-elected.
I don’t think there’s all that much more to it than that – except that this is all Brown knows. He’s spent 15 years cosying up to Bankers, and his entire worldview would collapse if he stopped.
You are absolutely right on this, Richard. We do need to separate retail banking from “investment” banking so that the buccaneering adventurism of the latter doesn’t imperil the payments and savings/financing systems. There is everything to be said for going back to the old division of clearing banks (living on their deposits) and merchant banks (living on their wits).
Glass Steagall seems a good compromise. Let the ‘masters’ play without the safety net and good luck to them.
The BOE should manage systemic issues with powers to nationalise or rationalise banks needing public support. It should be able to amend contracts in the public interest as it thinks fit in extremis.
The FSA should remain and tackle business on ‘Treating customers fairly’. Issues such as fee’s and charges, unfair contract terms, taking cases to court for judgements.
This could apply where a company or individual may be reluctant but it is in the public interest. e.g Unreasonable bank charges , unfair contract terms.
Brown designed the system with others, he seems unable to change course voluntarily.
Mentally tough or stubborn? Labour thinks to use him to draw poison, it should be positioning for survival.