Coffee House

Banking Commission to force Chancellor’s hand on reform

24 December 2012

As is becoming increasingly clear to David Cameron, the problem with answering calls for an inquiry into a scandal in one industry or another is that at some point that Inquiry will report back with a bunch of recommendations which may or may not be politically expedient to implement. The Parliamentary Commission on Banking Standards came up with proposals last week for an electrified ring fence, which the Treasury politely said it would look at, and Vince Cable rather more bluntly said the government should ignore, preferring instead that ministers get a move on with implementing the Vickers proposals, rather than opening up the whole debate again.

But the really pesky thing about these inquiries, so easy to set up, and so frequently called for (especially by Ed Miliband), is that their members don’t take kindly to the possibility that their recommendations might gather dust on a shelf. And given the chair of the banking inquiry is the tenacious Andrew Tyrie, it’s no surprise that today’s FT reports that the cross-party group of MPs and peers will table their own amendments to the bill implementing Vickers in 2013 if the Chancellor refuses to take on board their ideas.


That a cross-party group led by a Conservative plans to push the government further on banking reform is awkward enough, but as one member of the Commission observes to the FT, the push is made more awkward by the group’s representatives in the Lords:

‘It will be a pretty formidable alliance when the first three speakers in the Lords on any amendment are a former Tory chancellor, a former treasury committee chairman and the Archbishop of Canterbury.’

The Liberal Democrats have always wanted to go further on banking reform than the Conservatives, and though Vince Cable and George Osborne may be wary of unpicking the hard-won consensus, the Commission’s intervention does mean that those tensions will be forced out into the open once again.

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  • the_politicoid

    It never ceases to amaze me how many times the reasons for the crisis have to be reiterated. This separation of retail and investment banks is one of the most important reforms we need. I’ve just had to write about it again on my politicoid blog

  • Hornblower

    I remain puzzled why the good people of Hartlepool could return (surely to them) such an alien as Mandelson . His snout has never been out of the trough since. He is the epitome of everything that befell this nation as a consequence of the last disasterous Labour administration….and now i hear Mandy is in banking! -watch your pockets

  • Rahul Kamath

    The commissions have been working in the background. If there is now an open debate in parliament is this a good thing for our democracy? The UK, under the mistakenly reviled GB, was a world leader in saving the financial system. Maybe we now have an opportunity for world leadership in reforming it (with a public consensus) too.

    • anyfool

      was a world leader in saving the financial system.
      You are surely in the running to outdo Telemachus in spouting utter bilge about the last government.
      Brown and crew are the worst government in the history of these Isles, that the full scope of the damage done is something that you are unaware of tends to give credence to the evidence that the overall standard of the mental capacity of the inhabitants of this now Septic Isle is in a downward spiral and i cant see your contribution helping to stabilize it.

      • Rahul Kamath

        U r rather bilious for Xmas eve. Rough times?

        • Coffeehousewall

          Rahul lives and works in the US. I think he is a troll.

    • Coffeehousewall

      I thought you were resident in the US? In what sense is parliament yours?

  • RKing

    Inquiries,,,, Referendums……???

    Implement or ignore…….?

    Maybe one day our leaders will realise that they have to LISTEN and IMPLEMENT!!

    Just wait until the Bulgarian invasion begins… “immigation? we ain’t seen nothin’ yet”
    Maybe that pratt Blair should have listened as well.

    • Coffeehousewall

      366 days until 25 million immigrants from the EU turn up. We need to get building those houses quickly.

  • alexsandr

    we have seen the print media slowly being killed by the internet, and i expect to see several national dailies stop printing in the next few years. And leveson will be just in time to kill it off entirely.

    Now we have the banks. The current banking model is clearly rubbish, and I expect to see alternative models come to the fore in the next 10 years. Look out for new mutuals and the rise of peer to peer lending. Even the government is coming to the view putting £100m into alternative lending channels including £20m to funding circle and £10m to Zopa. So this banking regulation may just oversee the twilight of traditional banking.

    • FrenchNewsonlin

      Hmm try googling The Bernard von Nothaus case to see what happens when the banks believe they are about to lose their money monopoly! As for ‘electrified’ fences these will only work if the voltage is high enough to kill any future banking bandits.

      • alexsandr

        they have tried their own currency in Totnes too

        • Russell

          And the one and only problem with Totnes money is that it is linked to the £sterling.

          • Coffeehousewall

            What about the increased use of barter and exchange?

    • Coffeehousewall

      Back to a cooperative model perhaps?

  • Earlshill

    and quite right too. Until retail banks are ring fenced away from investment banks, the threat from the risk-taking shadow banking system will always be there. There will be no solution to the lack of growth in the UK economy whilst our politicians connive with investment bankers to protect them at taxpayers’ expense from the consequences of their actions.

    • HooksLaw

      Surely if there was protection for investors as you claim then there would be more (risk free) investment and more growth.

      • alexsandr

        I think your perception that banks borrow from little old ladies to led to the butcher to buy meat may be a little outmoded. now they move money round the world at the click of a mouse borrowing internationally to relend internationally. Which is why I favour the alternative lending models I outlined earlier, keep it local, please.

    • Andy

      So Northern Rock was an investment bank ? HBOS was an investment bank ? The rot in the banking system is not so much with the investment banking devisions, but with the retail sections. RBS was sunk because the vain glorious Goodwin bought a Dutch bank without ‘due diligence’.

      • Coffeehousewall

        Its much more complicated than just an investment v retail problem. As has been pointed out many of the problem banks were not investment banks.

    • Ken Lorp

      We absolutely need to ring-fence the retail banks. As we’ve seen over the last few years, the level of risk therein threatens the health of our Investment banks.

    • Robert Castlereagh

      Cannot believe you are so gullible that you believe the ring fence had anything to do with the fall of RBS.
      Or that anyone would let a divorced investment bank fail.
      Such action would destroy the economy worse than Brown/Balls.

      • Coffeehousewall

        Agreed. It had nothing to do with RBS.

    • Baron

      Earlshill, sir, there ain’t much money in retail, the big bucks are in facilitating the flow of mega money across frontiers, all global stuff.

      The tossers like the Cabling one, the ignorant ones like you are going to kill the best part of the service sector we had. Madness.

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