Congratulations to David Davis, John McFall and Vince Cable on today's proposals, which include:
- risk-free "safe haven" accounts, guaranteed by the Government in return for lower interest;
- bankers to be given formal ethical training before they can take a position, and their performance to be overseen by an independent body similar to the General Medical Council for doctors or the Legal Services Board for lawyers;
- remuneration for senior executives to be linked to levels of customer satisfaction and complaints;
- frontline and branch staff in banks to be banned from taking bonuses for sales;
- "living wills" setting out what is to be done, and by whom, in the eevnt of a bank's failure; and
- breaking up of the banks, so that their speculative casino activities are quarantined from their everyday savings and loans business.
To which one should add:
- the public stakes in RBS and in HBOS to be recognised as permanent, non-negotiable safeguards of the Union (a cause dear, in different but related ways, to the hearts of all three of Davis, McFall and Cable), with the profits of each from those stakes divided equally among all households in the United Kingdom; and
- apart from that, all the banks to be turned into mutual building societies, ironclad as such by statute.
The transfer of the regulatory authority to the Bank of England would be almost meaningless unless it were accompanied by the transfer of democratic political control over the Bank of England. I still don't like George Osborne much, but moves such as this, however imperfect, should be set alongside his past statements that sound money mattered more than ever-lower taxation and that a British Glass-Steagall Act should be introduced. As with David Cameron's and William Hague's steps, however tentative, away from neoconservative and back towards High Tory foreign policy, there is potential, even promise.
If Cable really is sent to the IMF so that Dominique Strauss-Kahn can stand for President of the French Republic, then that would of course cause a by-election at Twickenham. Lib Dems enjoy a level of local control over candidate selection such as Conservative Party members can no longer imagine and Labour Party members never could. Cable looks like a lot less trouble in the Commons and in the Cabinet than he would be out of either, never mind both, of them.
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If front-line bank staff don't get bonuses, then either their pay will go down or jobs will be lost. No bank, nor any other busniess, will voluntarily increase wages to make up for lost bonuses and maintain staffing levels, for no commercial gain. Indeed, given the loss of incentive to sell, this proposal would have the banks do all of this in exchange for a commercial loss. I foresee job losses.
ReplyDeleteFurther, there is already a safe haven for savings, guaranteed by the state in return for low interest. It's called National Savings and Investments. I've got an ISA there, for precisiely that reason. Everyone could. They don't because they don't want that deal. Until that changes, which will only be when people lose their savings when banks fail, this plan is a none-starter. Would Mr. Cable allow banks to fail, taking people's savings with them?