What they are saying about Adair Turner

Lord Adair Turner, a longtime City grandee and currently head of the watchdog Financial Services Authority (FSA), has stirred up a hornet's nest with his suggestion that the London financial services industry is too big, too greedy and that much of what it does is "socially useless".

And along with the searing critique in this month's Prospect magazine, comes the bold suggestion that a so-called Tobin tax might be levied on the millions of daily financial transactions in the Square Mile.

Such a tax, put forward by anti-poverty campaigners, would, said Turner, cut banks' profits, thus reducing the pool of money available for bonuses. Turner (pictured above right, outside Number 11 Downing Street with Bank of England Governor Mervyn King) said he sympathised with applying a tax that would be "a nice sensible revenue source for funding global public goods".

Equally radical was Turner's comment that he no longer saw it as one of the primary aims of the FSA chairman to promote the status of London as a global financial centre. He said the FSA should be "very, very wary of seeing the competitiveness of London as a major aim".

Predictably, his comments have gone down like a lead balloon with the banking sector, and he has been accused of playing into the hands of rival financial centres such as Paris and Frankfurt.

Here is how commentators and politicians have reacted to Turner's bombshell:
 
WHAT THEY ARE SAYING:• AGAINST: Howard Wheeldon, senior strategist at BGC Capital Partners: "Quite honestly I am appalled, disgusted, ashamed and hugely embarrassed that I should have lived to see someone supposed to be held in high esteem and that who already commands a senior and crucially important position as effective head of the UK regulatory regime making such damaging and damning remarks."

• FOR: Nils Pratley, the Guardian: "The idea [that modern investment banking is a racket] is not heresy. You will find the view expressed frequently (although usually in private) by senior fund managers, folk who used to be considered the core of the City club. Many of these people are tired of seeing companies in which they invest pay exorbitant advisory and underwriting fees to investment banks. They conclude that the primary purpose of investment banks has become the advancement of the financial interests of the people who work in them."

• AGAINST: Simon Gleeson, lawyer, Clifford Chance: "It will now be a race as to who will sack him first…To be brutally honest, if he expected to continue in his position next year, he would not be saying this at all. He must have known this would annoy his political masters."

• FOR: Frank Field, Labour MP and former welfare minister: "It looks like Adair Turner has fired the starting gun on thinking more seriously about the City and what it is for and what kind of pay people should expect. When the City has largely made money by moving money around and not by making anything, it is clear the pay is out of kilter."
 
• AGAINST: Boris Johnson, Mayor of London: "Anyone who seriously believes that the competitiveness of the City of London should not be of paramount importance or a major aim of the FSA is crackers. I'm sure that on reflection Adair Turner would not want to imply that."

• FOR: Avinash Persaud, the Financial Times: "The size and profitability of the financial sector affords it great political influence. Before the credit crunch it was the only industry more powerful than the defence industry. Like the defence industry it has been able to frame the intellectual and regulatory debate in its favour. The classic economists’ solution to all this is a tax. Setting the right level of this tax so as not to damage liquidity will be hard, but probably not as hard as being one of the first regulators to openly discuss it."

 • AGAINST: Lord Oakeshott, Liberal Democrat treasury spokesman: "A Tobin tax is interesting but is unworkable without international agreement, which could take years and probably will never happen."

• ON THE FENCE: Tracy Corrigan, the Daily Telegraph: "Is the Tobin tax a good idea? The potential disadvantages are that 1) by discouraging trading in foreign exchange, costs would rise for others and it would become more expensive for companies to conduct their normal business or hedge their exposure 2) the tax would either be too small to be effective or big enough to discourage bona fide trading and 3) it might not make markets more stable – less trading could mean that currencies are more likely to become substantially over- or undervalued."
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