Never blame bankers for the instinct to profit

Another day, another prognosis. Last night the Institute for Public Policy Research said UK regulators had failed to address problems at the root of the economic crisis and there is a real danger that it won't be the last.

The institute is not the only body to be issuing similarly shrill reports in the anniversary week of the Lehman Bros collapse. Two days ago President Obama urged Wall Street to accept reform and operate with a greater sense of public responsibility. His call was met with a general response of as if!

The IPPR report is the fruit of an extensive review of the capitalist model and seeks to encourage better outcomes for all, not just a small elite. One can just picture bankers at Goldman Sachs and elsewhere trying to keep a straight face.

Still, this is the season of economic piety and the banks could have done a better job pretending to be penitent a little longer. But no, they're back reporting massive post-bail out profits and hefty bonuses. And perhaps they're right: long hours in a pixellation of financial data and risk projections is a kind of living hell that deserves to be highly paid.

But reports like How to Make Capitalism Better from the IPPR (the institute was formed by Labour parliamentarians Clive Hollick, John Eatwell and Tessa Blackstone) have the potential to goad bankers into further excessive profiteering. Not to say the report is necessarily wrong. It's just that it comes too close to blaming bankers for the instinct to profit.

If one is going to criticise, one might as well go all-out - as a recent Rolling Stone critique of Goldman's did. "The first thing you need to know about Goldman Sachs is that it's everywhere," the counter-culture mag wrote. "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

Instead, the IPPR gave us worthy drivel. The success of tomorrow’s capitalism, the institute says, requires an effort to base UK growth more on exports and less on debt-fuelled consumption.  "Alarm bells should be ringing with the early signs of a 'back to business' attitude in the City," said senior economist Tony Dolphin. "There is little evidence that policy makers are taking measures to ensure the next economic recovery is better balanced than the last one."

For now, UK Treasury officials are reluctant to speculate on any recovery. The Bank of England thinks the recession is over but the pain will go on. Governor Mervyn King says it's "highly uncertain" that a rebound can be sustained, partly because crippled banks remain reluctant to boost lending - and are unlikely to do so until assets are re-priced. The FT thinks banks may even start offering negative interest rates.

But with everyone offering their anniversary opinions, it turns out the past year of turmoil might have been avoided all along.

Yesterday Warren Buffett confirmed that he was contacted by Barclays at the height of the financial crisis with a request to provide insurance for the bank’s bid to buy Lehman. Buffett says he asked for more information by fax - but never received anything.

It turns out Barclays boss Bob Diamond left a message on his mobile instead - which Buffett rarely checks. The 'Sage of Omaha' wouldn't say whether he would have made a deal. But he did say that if you badly needs to reach him: "Don't try to get in touch with me by cell phone..." ·