The gloves are off!
The last month or so has seen some overt posturing over the likely outcomes of the Independent Commission on Banking’s report:
“In the red corner, we have the entire ICB, Bank of England Chairman Mervyn King, BoE Deputy Chairman Paul Tucker, BoE Director Andrew Haldane, and FSA Chairman Adair Turner all calling for radical moves in bank regulation.
In the blue corner, we have George Osborne and some banks.”
Courtesy of an excellent article on the Naked Capitalism website. The article reports how the ICB is leaning towards the separation of retail & Investment banking (as in a recent speech by the ICB chairman Sir John Vickers), and that they are not alone in this. They have also sought counsel from Paul Volker, former US Fed Chairman and no fan of modern financial gerrymandering. The red corner has quite a formidable intellectual pedigree.
What is quite surprising is that the UK Gvt in trying to negotiate bonus restraint from the banks (Project Merlin), appeared to be asking concessions from the ICB. The blue corner bites back, then. Not through intellectual argument, but political bullying. Confronted with this, apparently the whole ICB panel threatened to resign! Let’s hope they can hold their nerve for a bit longer:
“The ICB reports in September, so unless the battle really flares up and goes public before then, there will be plenty more ferrets-in-a-sack action to come.”
Indeed, an interim report is due in April, and this will be a chance to clearly see which way the ICB is leaning, and also to observe whether underhand pressure points are being applied from the blue corner again.
Without an honest and open intellectual debate, we cannot profess to be a free and open democracy, ruled through technical & intellectual competence. But instead a cowering populace, once again brow-beaten by bluster and thinly veiled threats from the banks.
The coming year will be a true test of our nation’s integrity and honesty. I hope it ends well.
Simon Johnson has joined in on this subject:
“Just when it seemed that the debate over banking was winding down …. two of the biggest name policy heavyweights have entered the arena.
In Mr. (Mervyn) King’s view, casino-type banking caused the crisis of 2007-08.
According to Mr. de Larosière, new regulations more broadly and the capital requirements of Basel III specifically will have negative effects on the European economy.
………..on the merits of the argument, King wins hands down”