A Case for Applying Common Sense
On 12th September this year, the Independent Banking Commission under Sir John Vickers published its report into the banking industry in this country and the necessary measures to be enforced that would prevent a repeat of the near collapse in 2008 that became known latterly as the credit crunch. This ultimately led to a global recession and public spending cuts by countries across Europe and North America.
The main recommendation is that the retail operations of High Street banks must be ring fenced from the more risky investment banking divisions. Banks would also be expected to retain more capital reserves as a preventive means to discourage the more idiotic risk taking. This might also have the effect of cutting bank profits and therefore some of the more excessive bonuses being still paid out in the City of London. Despite the fact that the Government is now a major shareholder in some institutions such as RBS Group and HBOS, it has done nothing to stop bankers' bonuses even after the taxpayer poured in billions to save the banking industry. This is why so many people are so bitter, notably in the public sector, and their rage is liable to trigger off a wave of strikes over pensions.
The Financial Services Authority would be replaced by a so called Financial Conduct Authority under present legislation going through the House of Commons. The FSA was supposed to be looking after the interests of the ordinary man or woman in the street and failed abysmally in this capacity to stop a banking collapse. Everyone in this country is now paying through the nose as a result of their uselessness.
The ICB would also like to see more competition on the High Street and for customers to be better informed on the various offers available to them. It has reneged on its intent to force Lloyds TSB Bank PLC to sell off more retail branches for the time being. It wishes its recommendations to be in force by 2019. There are many no doubt who believe that this timetable should be shortened to 2017 or even sooner.
Overall the main thrust of this report does represent common sense proposals that must be implemented and backed up by legislation if that is what it takes. Ordinary taxpayers cannot be expected to pick the bill a second time around on a scale of billions of pounds or Euros. This is utterly unfair as well as ludicrous. Even in this publication, there has been enough discussion and criticism of the perils of unrestrained credit and its evils. Too little has been said of the Wild West mentality that was running riot in the City and this is another symptom of the total sickness.
The Government was elected on an election promise to rebalance the economy and create a platform for long term prosperity. On that basis, it must implement these reforms or completely lose credibility with the electorate. This summer, we have already witnessed on the streets of London and other cities the result of community breakdown when one section of society feathers its own nest at the expense of the rest of us.
Mark Sandford - Permission granted to freely distribute this article for non-commercial purposes if attributed to Mark Sandford, unedited and copied in full, including this notice.
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