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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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Couldn't put it better than Leftofleft has. Its time we turned back to the era of responsible banking and lending. To when you had to convince your LOCAL bank manager that you were a good bet, not some undereducated child on a computer terminal. Likewise the commercial arms of banking should have to trade in a moral and honest manner so that once again the phrase 'Safe as the Bank of England' would actually mean something
Unless we are bank barrons, ripping off everyone in sight, we are wage and debt slaves. The ultimate protector of democracy is a good rifleman with a gun. Is it not time that there was a slaves revolt and threw out all these insider tricksters and their political fixers? We don't need 'bankers' any more than we need Mubarak, Gadafi, Ben Ali and those ridiculous Bharainy fat men and their backhander toadies. A good start would be the City Masonry and their ridiculous rituals and kissyourarse life style. Banks should be allowed to fail, the odious creeps that run them should be charged with fraud and if found guilty by a non Masonic judge and jury consigned to an appropriate and unpleasant prison. Unless, of course, we follow the example of the 'Royal' family of Saudi Arabia and cut their heads off in public. That open space at the end of Threadneedle Street seems appropriate.
The reason governments get involved in guaranteeing banks, is simply because if they didn't millions of people would lose their deposits due to the potential exposure to the risky financial instruments that the Investment sides of their business use. The answer to that is to put the proposed firewall in place between the retail and investment arms. As the EXISTING government is proposing. Read Seldon's biography of Brown: government of either ilk would be terrified to lose the banking sector - it's a valid consideration. As for the rest of the comparisons with Union bosses from the 70s? Notsomuch.
This is an excellent article Richard Ehrman and I do agree that the softly softly approach has not worked . It`s human nature that in a very high stakes game at the top the bank`s will do all they possibly can to preserve their status quo. During the halcyon days , 1998 - 2008 , the banks did not have to try very hard to preserve their cherished way of life , just like the unions in the 70`s who then held the upper hand. This was because money was whirling around , it`s supply was seemingly endless and cheap so that no-one bothered to question renumeration and bonuses , you don`t bite the hand that feeds you .
The ICB interim report reveals that the banks are feeling that the government can be dictated to in the same way as before they turned up at The Treasury with their begging bowls . Of course when that happened
the government were too terrified to even think through the consequences of a bail-out that not only guaranteed depositor`s money but also rescued the commercial side of the banks. At that point they could have and should have insisted that before the money was handed over it would be accounted for separately by the banks to show which parts were truly being shored-up.This frantic way of dealing with the crisis it appears also allowed Fred Goodwin to walk away with his mega pension , Lord Myners has admitted since that his team simply didn`t have time to look into minor matters such as an individuals pension plans !
So the government missed the boat then but it should not miss it again and should insist on the breaking up and selling off of the government subsidised banks as well us making the high street and city trading sides of all banking separate concerns. Mind you we are now talking of a tory lead government so don`t hold your breath .