We have another banking crisis.<\/p>\n
The\u00a0banking\u00a0crisis of 2008 was, by consensus, caused by incompetence, although some of us argued that a corrupt demand for lax\u00a0regulation\u00a0had\u00a0exacerbated\u00a0the issue, backed by what we saw as at the very least\u00a0deceitful\u00a0use of offshore and other abuses of\u00a0transparency.<\/p>\n
But now we know that 2008 was not just caused by incompetence. There really was corruption - and not just of the hidden\u00a0variety, but blatant, overt corruption to achieve\u00a0corporate\u00a0goals.<\/p>\n
It's not the time to say we told you so. But it is the time to say that this has to be the end of the line. That\u00a0line\u00a0started in the early 1970s with relaxation of monetary controls, was enormously facilitated by the relaxation of capital controls in 1980 or thereabouts and in the UK was made possible by the Big Bang\u00a0reforms\u00a0of the City of London in 1986.<\/p>\n
It is not chance that all happened under Tory governments.<\/p>\n
Free market\u00a0capitalism\u00a0has led where many of us said it would. Let's even be honest, where Marx said it would (and I don;t consider myself a Marxist). It has reached the point where it is\u00a0destroying\u00a0itself, because that is very clearly\u00a0what\u00a0is happening now.<\/p>\n
We now have naked, raw, aggressive\u00a0capitalism\u00a0as practiced by\u00a0investment\u00a0bankers\u00a0consuming\u00a0the value of their shareholders. That's as close as it gets to\u00a0capitalist\u00a0cannibalism. \u00a0And in that case action is needed now to save capitalism\u00a0itself. There is literally no excuse for inaction anymore, even on the right, not that means such action will be forthcoming from that direction.<\/p>\n
For those - like me - who believe in the mixed economy which is the basis of my vision of The Courageous State<\/a>\u00a0then the need for action is even more pressing. As I argued in that book, banking needs to now be put back in its box.<\/p>\n Let's be clear:\u00a0banking\u00a0is vital, as are financial services. But the monstrous banking we have suffered that consumes the economy and even the banks on which 8t feeds has to be cut out of\u00a0our\u00a0economy like the cancer it is. It is literally killing us. And a\u00a0government\u00a0that does not realise that is failing us.<\/p>\n So, we need to ring fence\u00a0investment\u00a0banking. Not in 2018. By early 2013 at the latest. Murdoch had his business investigated this year. A month or so later he announces it will be\u00a0split\u00a0in two. If that's possible in the media its possible in banking. And let's be unambiguous: the High Street banks that will emerge will be streonger for it: their capital is being consumed by investment banking right now.\u00a0Arguments\u00a0to the contrary are just corrupt lies.<\/p>\n And heads need to roll. Whole rafts of senior bankers need to leave the industry: their mentality is corrupt and has to be swept away. There will be decent people who can take their places: have no doubt about it. But it will take leadership from a new type of non-exec director dedicated ti making banking work again that will let this happen. Again, I think such people exist; they're just the outsiders now. The farce that the Coop was told\u00a0recently\u00a0that its board was\u00a0not\u00a0suitable to run a bank\u00a0because\u00a0it was not made up of bankers has to go: it's precisely\u00a0because\u00a0people are not bankes that they may be suited to their new roles of making sure banks are clean, although competence\u00a0will\u00a0also be important too, of course.<\/p>\n But more than that, we need to change systems.<\/p>\n Banks need to wave goodbye to tax haven opacity.<\/p>\n Banks need to stop servicing the tax abuse industry in such places.<\/p>\n Banks need to be banks - and not\u00a0pedlars\u00a0of useless\u00a0financial\u00a0products.<\/p>\n Banks need to be rooted in\u00a0communities: there is a good case for breaking up\u00a0banks\u00a0into regional operations again and to split organisations like RBS into separate brands once more.<\/p>\n Mutualisation needs state support to get it back on its feet.<\/p>\n A green\u00a0investment\u00a0bank\u00a0is vital.<\/p>\n PFI debts should be traded in for state support. Their forfeiture\u00a0should\u00a0be the price for the\u00a0implicit\u00a0deposit\u00a0guarantee\u00a0banks enjoy.<\/p>\n Insurance and banking should be\u00a0separated.<\/p>\n A new National\u00a0Audit\u00a0Office should audit the banks - the Big 4 have\u00a0completely\u00a0failed to hold banks to account and have grossly failed in their duties to report on whether their accounts are true and fair.<\/p>\n A UK bank with an operation in \u00a0a tax haven that does not automatically information exchange with the UK should be told to do so or shut the operation. And that should apply to any bank trading in the UK: not just those\u00a0incorporated\u00a0here.<\/p>\n And we do, of course, need\u00a0country-by-country reporting from banks.<\/p>\n Derivative and other trading must be better regulated. Liability risk must be properly accounted for.<\/p>\n Tax must be paid in the bright place at the right time. And be accounted for.<\/p>\n Unions must be\u00a0represented\u00a0on boards.<\/p>\n As should depositors.<\/p>\n I could go on: the reform needed is root and branch. It is possible. It can be delivered.<\/p>\n But not by a\u00a0government\u00a0that thinks a review of LIBOR setting is enough. That's a ludicrous excuse for inaction. And in the meantime the City will be collapsing, bankers will get away with it and somewhere this summer a young person will go to prison for stealing water worth \u00a33.25 as their anger at their\u00a0deliberate\u00a0unemployment spills over, however much I will regret it doing so.<\/p>\n We have choices. We can tackle\u00a0banking. We have to do so if markets are to survive and the mixed economy is to\u00a0survive\u00a0with them.But we have to act. And a\u00a0government\u00a0that refuses to do so will deserve to be consigned to history.<\/p>\n","protected":false},"excerpt":{"rendered":" We have another banking crisis. The\u00a0banking\u00a0crisis of 2008 was, by consensus, caused by incompetence, although some of us argued that a corrupt demand for lax\u00a0regulation\u00a0had\u00a0exacerbated\u00a0the
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