The laughably called “Independent Commission on Banking” has presented the great answer to the banking collapse that has cost every one of my readers in the UK and US at least £10,000 for every man, woman and child in your family. And the great answer is – do nothing to control the bankers. Or, in the words of the report:
“Rather than pursuing more radical policies towards capital or structure, the approach outlined above is a combination of more moderate measures.”
Moderate to non-existent. Retail banking and casino banking will still take place in the same bank, but in different divisions. Retail banking will be subject to a laughably low ten per cent equity requirement – ie you can only loan out ten times the money you actually have. In fact this will operate not as a floor but as a ceiling – banks will never have more than 10% equity against loans, because despite the so-called “firewall” any capital they have in excess of 10% will be able to be invested in the “casino banking” side.
On banks paying obscene salaries and bonuses when their gambles pay off, and then going to the taxpayer when their gambles fail, there are no proposals whatsoever.
UK governments routinely nowadays slouch off responsibility for policy making to “independent” reports, which are always set up to provide exactly the answer which the government wanted. The government then hides behind them. These are simply Establishment protection mechanisms in which “safe” figures forward the vested interests of the powerful and wealthy. Browne, Vickers, Butler, two Huttons, Chilcot – we all know the form.
It is therefore an astonishing reflection on the naivety of the parliamentary Lib Dems that they were duped into demanding in advance the full implementation of the recommendations of the Vickers report, in the expectation that it would be sensible and radical. The Tories have reeled them in like a fish. Clegg of course is a Tory on economic and particularly City issues and will almost certainly have played a part in fooling Cable and his own party.
The airwaves are full of City types welcoming this “sensible” report. What more do you need to know?