Obstinate banks are the trade unions of today
ICB report will do little to heal the widening rift between banks and society
Even in the wake of the biggest financial crisis for 70 years, bankers struggle to understand why they are unpopular. Business, at least for them, is back to normal; surely, they argue, it must be time to move on.
But for the rest of us business is far from back to normal. Of course we are furious that they should once again be awarding themselves huge bonuses, while we suffer.
Yesterday's interim report from the Independent Commission on Banking was widely thought to have pulled its punches. A fairer assessment would be that its recommendations should help make banking safer, but will do little to heal the widening rift between banks and society.
The problem with the banks is as much political as financial. Much of it boils down to the implicit guarantee they enjoy from the taxpayer, an advantage which is available to no other business. Without it the banks would not be nearly so big and nor would their bonuses - and the rest of us would not now be paying for their folly in higher taxes and lost jobs.
Yet for all its talk of allowing the banks' investment "casino" operations to fail, there is little in the Commission's report to suggest that the taxpayer is going to get off the hook anytime soon.
The Bank of England recently estimated the value of the public guarantee to the banks at £100 billion a year, 20 times the likely cost to them of the Commission's recommendations. But when the banks flex their muscles, too many politicians still think it prudent to back off. Force us to split our retail and casino operations, the banks bluster, and there will be less lending and higher charges on the high street. Curb our bonuses, and we will be off to New York or Hong Kong.
Whether these threats are realistic, though, is questionable. Would they really give up on their high street operations, out of simple pique? Would any other country really want to accept responsibility for one of our bloated banks?
In their determination to resist reform, the banks are beginning to resemble the over-mighty trades unions of old. A softly softly approach did not work with the unions 40 years ago. There is little reason to suppose it will work with the banks now. ·
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