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Will banks be an election issue?

Robert Peston | 09:12 UK time, Tuesday, 30 March 2010

I was recently asked by the Future of Banking Commission whether there was a risk that debate on financial reform would descend into party-political knockabout.

I said that I rather hoped it would, because it would be evidence of politicians believing that voters care about the arguments over how to prevent a repeat of the worst banking crisis for many decades - and that voter engagement extends beyond fury or despair over multi-million pound bonuses.

We all know that how banks behave matters more to us than how most other kinds of business behave: protecting our deposits and providing credit to businesses and households that need it, well it's hard to think of any other industry more vital to economic stability and our prosperity.

In theory, banks ought to be respected pillars of society. But time and again they find it difficult to live up to that expectation: today's damning indictment by the Office of Fair Trading, the competition watchdog, of the collusive behaviour of Royal Bank of Scotland will be seen by many as (sad to say) par for the course.

RBS has agreed to pay a fine of just under £29m for stitching up a cosy deal with Barclays on the pricing of loans to large professional services firms (such as solicitors and estate agents), where the duo dominate the market. Barclays escapes punishment because it blew the whistle.

Anyway, I'm sure that the new chief executive of RBS, Stephen Hester, would want you to know that he wasn't at the helm when the collusion took place.

Even so, I had thought that the slogan "collusion is us" no longer applied to British banks: perhaps I was getting ahead of myself.

That said, and on a related issue, I took a bit of comfort when last night's debate between the actual and wannabe chancellors (Darling, Osborne and Cable) strayed into the territory of whether the banks should be broken up.

Cable wants them dismantled. Darling said this would be fatuous, because what he described as smaller, simpler banks - like Northern Rock and Bradford & Bingley - also had to be rescued by the taxpayer in 2007 and 2008, along with the huge complex likes of Royal Bank of Scotland.

Which is, of course, absolutely true.

But it is to ignore the argument that the proportionate cost to taxpayers and to the global economy was significantly greater because of the woes of the interconnected giant institutions, from Lehman, to AIG, to UBS, to RBS, to HBOS, to Citigroup.

Also, if there had been a cap on banks' size and a ban on leveraged-based speculation by integrated universal banks - such as RBS and UBS - the impact of the closures of wholesale funding markets in the summer of 2007 and beyond would have been less severe.

There's an additional pertinent argument that the bigger the bank, the more confident it can be of being rescued by taxpayers: the directors know that if their ship goes down, the whole economy goes down, and that therefore they'll be bailed out.

Which is arguably why they feel able to take reckless risks to generate profits - and they're not prevented from doing so by creditors, who also see taxpayers as the comforting backstop. Hey presto: taxpayers (you and me) pick up the bill when the market refuses to recapitalise Royal Bank of Scotland after it suffers life-threatening losses.

Anyway, the Channel 4 audience for the chancellors' debate seemed to stay awake during the interchange on whether banks' size matters. And you've read this far into this post, so maybe the future of banking will be an issue in the general election.

The risk, of course, is that the further away we move from the moment of acutest financial and economy crisis, the less urgency attaches to the reform of the structures that contributed to that stonker of a mess.

That's why five of the world's most powerful government heads - the presidents of the US, France and South Korea, and the prime ministers of the United Kingdom and Canada - have this morning put their names to a letter that can be paraphrased as "pull your fingers out boys (and Angela Merkel); we can't afford any diminution of our collective efforts to strengthen banks and correct the fault-lines in the global economy".

The quintet are the past, current and future presidents of that new grouping of the world's economic powers, the G20. And they fear that a combination of national self-interest and post-crisis complacency may mean that the flaws in the global economy and financial system aren't properly corrected.

Lest we forget, as yet the imbalances between debtor and creditor nations have not been eliminated; and there has not been structural reform of banking. A once-in-a-generation opportunity to fix financial globalisation may yet be missed.

Comments

  • Comment number 1.

    You talk like the economic crisis is over rather than temporarily masked by unsustainably easy money.

  • Comment number 2.

    Banks will be an issue for the election, along with MP's expenses, lack of investment in the country and the banks advice to selling off every and any company to foreign companies just to get a short term bit of cash, which they then lose on poor investments.

    It is a time to reform, but I cannot see who of any party would have a good idea what to do. They are all stuck in shouting each other down at the moment.

  • Comment number 3.

    In 99/00 the total annual figure for stolen or damaged property in the UK as a result of crime was £19 billion. Its about 25% higher now.

    Interesting to compare what the cost to the taxpayer has been to bail out bankers and the cost of "crime" against property.

    Have we lost our government so completely to clientism that there is even a question whether the banking system should be an election issue?

    It is not individual banks that is the issue. Its a poker game where the taxpayer bails out whoever loses. Banks like Barclays just happened to be the winners. Their winnings were other banks', and now our, losses.

    The immediate crisis may be over .... but by heavens the mortgage we took out on our futures to keep this obscene party going is well and truly with us.

  • Comment number 4.

    How about we make the United Kingdom of debts' GOLD SALE an election issue ? and we can talk about how the man asking to run the country personally cost us all many billions of pounds...

    the UK is insolvent anyway if there was a good way to short gilts i'd be doing it....

    the only reason the US bailed out AIG was to save Goldman...

    these arguments are fatuous GOVERNMENTS! (precisely the present encumabants) acted to save the global banking system... with public money... caveat venditor !

    They should have been more careful what they wished for when saving the banking system eh ?

  • Comment number 5.

    The key issue about Banks is how much profit will we make on their eventual sale? That's a key election issue.
    Gordon Brown ordered an ingenious auction for the mobile phone networks and netted us £22billions clear profit. Maybe he can auction our Bank shares for a big profit too?
    As for regulation and special bank taxes, those have to be agreed with our international partners so that neither Europe nor US can become a 'free rider'. Because the Tories have difficulty making agreements in Europe, and we MUST get international agreement, they'll not want to discuss this issue properly. Expect lots of posturing but nothing constructive 'til after the election.

  • Comment number 6.

    Very worrying that Darling could not see the bigger picture in terms of the banking crisis, even though he had to part nationalise 2 of the biggest players (RBS & LLoyds HBOS!)

    That he must have conveniently tried to forget the banking crisis, because it happened on his watch and with their feeble regulatory set up in place, says much about Labour's style. All spin, no substance and not much to show for all the massive tax rises.

    He's obviously only interested in the least amount of regulation, so that the banks can go back to most of their old ways and hope that this brings the corporation taxes rolling back in sooner rather than later. But failing to limit risks to the taxpayer in future, (when he'll be long gone anyway?)

    Vince clearly appeared to be the only one with any common sense, (stood between two very irksome clowns.)

  • Comment number 7.

    Only to see them be penalised in some way. Most live with ridiculous mortages and treat debt in the same way-what choice is there? As long ss they get credit; the financial system banking reform segregation of risk and leverage has no perceived effect on credit or loss, until it does.

    "its been a bumpy ride, but breaking them up wont do nothing. But those bankers and their bonuses, they need to be punished".

  • Comment number 8.

    Do you feel competent to comment on the future of banking ? Especially as it was your irresponsible reporting that started the run on Northern Rock and the hysteria about bank bailouts. These events enhanced your profile but did nothing for the country. Caledonian Comment

  • Comment number 9.

    QUESTION
    Where do all these Banks and Governments get all their funding from?
    _________________________________________________________________________
    ANSWER
    It's none of your business
    You can go to HELL

    Who are you to judge
    There is only one true judge and that is god
    so chill and let my father do his job

  • Comment number 10.

    Yes of course the banks will be an election issue because Labour have failed miserably to ensure that the banks - or for that matter the entire financial services sector - reconnect with the needs of the real economy.

    Until they or another party do this then rebalancing the economy will remain a soundbite.

  • Comment number 11.

    Voters will think about the bank bailouts, it has cost the taxpayers a lot of money but it had to be done because the economy is too reliant on the financial services industry

  • Comment number 12.

    Breaking up the banks so that the ordinary person in the street can better understand who does what is an inherently democratic thing to do.

    It will lead to greater transparency and a greater understanding on the part of the common man as to which banks do what.
    It's a solution that trusts individual people more to be able to make their own choices as to what they do with their money.

    The alternative - a "let's just get a group of really intelligent people (in Basel) to work out slightly different capital requirements, and then it will all be alright" - is an inherently fascist/communistic/central planning type thing to do.
    It basically says "the people are too thick to understand these ever so complicated things. It is only us all knowing clever ones who can do it. Let's not give the people more information so they can choose for themselves, rather let's treat them like stupid idiots because it's only us that can save them from themselves".

    The UK government has (I think....?) never ever had the guts to take on any self-interested cartel and broken it up. It's never ever had the courage to do this, principally because the lobbying power of the vested interests in our country has always held sway.

    It is only the US who has a clear track record in this matter.

    So let's hope Obama and Volker seize the nettle. Which will then hopefully persuade the timid, perfidious, back-sliding UK authorities that this was a good idea all along.

    (Incidentally I had occasion to speak at some length over the weekend with a fairly high ranking member of the FSA, and it does seem clear that they are really absolutely terrified of the power of the UK banks, and that they will never, despite all the great theoretical talk of Adair Turner, ever say boo to a goose)

  • Comment number 13.

    # 2. At 09:53am on 30 Mar 2010, barry white wrote:

    > It is a time to reform, but I cannot see who of any party would have a
    > good idea what to do. They are all stuck in shouting each other down
    > at the moment.

    Well, that's the easy part. Banks are an essential service, and should be treated as such, like the police, the hospitals, the army, the schools etc. The only difference is that the police, the hospitals, the army and the schools are difficulty to run, while counting money is menial work and doesn't require high wages.

  • Comment number 14.

    Of course Banking will be a major issue not just at this election but for many elections to come.The problems they caused and the lack of oversight from the government will go down in the history books , my worry is that as we stand, this can still happen again, it must never be allowed to happen again.

    I see today FINES for market price fixing, it should be jail, no ifs and or buts, and the whole board of RBS are either complicit in this, or they are not worthy of the position they hold, take your pick but tomorrow they should be looking for other employment.Its pathetic to see our government licking their boots.

    It is only firm action by a strong government that will see our country recover , the sheep who led us into this will never be perceived to be doing the right thing.

  • Comment number 15.

    Robert

    You appear to believe politicians are more honourable, honest & less greedy than bankers. But who was it in charge when all this lending & growth was encouraged.
    Who borrowed billions of pounds & wasted it on public expenditure believing that tax would keep rolling in to pay it off.
    Now households & businesses are tightening belts & reducing their debts, what's the government doing - nothing. Oh the PSBR will be lower next year, yes but we are still borrowing, in fact I've seen nothing that says the govt will reduce borrowing just reduce the amount of new borrowing they make.
    But then they can retire on their golden goodbyes, inflation proof pensions & sun themselves in warmer climes basking in the mess they left behind.
    When will you & they admit they played a pretty big part in what happened in 2008

  • Comment number 16.

    The failure to reform the banks following the banking crisis should be an election issue.

    Retail banking should be separated from the casinos.

    Only retail banking should be guaranteed by the taxpayer.

    The septic debts need to be quantified.

    Decision making in the banks prior to the crash needs to be subject to criminal enquiry.

    Bonuses should only be paid on the basis of the net profit of the business as a whole and divided amongst all the staff. No profit: no bonus.

  • Comment number 17.

    Looks as if we must add conspiracy to greed. We need more whistleblowers - perhaps the government/BoE/FSA could have a bonus scheme for them! . The current and future management of banks are and will continue to be motivated by the extraordinary life-long wealth that a few years in the hot seat can bring - both salaries/bonuses and pay offs/pensions. That is why banks and finance institutions need supervision and governance needs to be legally enforcable so that serious misdemeanors can and do result in personal liability and/or prison. It is also essential for a mixed economy of ownership but the golden opportunities are slipping away. Breaking up the banks? Labour has helped them get bigger.

  • Comment number 18.

    So many British people have lost faith in the political system and capitalist system as it stands at present.
    "Crumbs for the masses, and vast riches for the greedy, stupid few".
    The public are in shock, and would be happy to see warning signs fixed to the heads of most politicians,(Vince Cable excepted).
    Most of us are shocked at the stupidity and greed of many bankers, shocked at the "perceived corruption" in Westminster, shocked at the "self-reward" of the establishment, and shocked at the colossal, expensive mess they have all created.
    It has been a dark period in UK history, and voting Labour, Liberal or Conservative seems a pretty weak choice.
    Perhaps we should have "Military Coup" as a ballot paper choice.
    Or perhaps Westminster should have a "remix" button on the side.....they are all thrown out and we start again from scratch....new parties, new people, new ideas.
    In the meantime we soldier on with this lot, and hope for the best, with fingers firmly crossed.

  • Comment number 19.

    Robert, you're spending far too much time smooching up to those that have caused the crisis. You need to get your hands dirty. Go on, do us all a favour and put a little radical thinking into your blogs. There's one hell of a mess outside the London bubble, it seems you're just not interested in it. A great Pity.

  • Comment number 20.

    These are not things that the governmental over-sight committees did not know. The governments were warned well in advance and did nothing. Changes are certainly needed to protect the retirements and investments of citizens as the banks cannot argue that they have been responsible in the actions or ethical in their presentations of risks. Deterents should be enacted that create individual responsbility for the board chairs and CEO's of banks. If they suffer personal loss of property and wealth when convicted of wrong doings and sent to jail then things may change. Steal a lot and nothing happens, steal a little and go to jail. The banking lobbyist have tight control of legislative bodies and the failure of the governments is as serious as the failure of the banks. The present system is corrupt no matter how much the aruge otherwise and as they say: the proof is in the pudding.

  • Comment number 21.

    Alistair Darling's replies to the Select Committee this morning which BBC unfortunately cut short were more revealing than anything said last night by the three hopefuls.

    He expressed his diappointment that Europe was no longer acting with the urgency it showed at the height of the credit crunch when in three months more action was taken than over many years.

    They have once again lapsed into complacency and no action is being taken to stimulate growth and employment.

    Well if they don't stimulate the Eurozone there isn't a lot of hope for growth here.

    We are continuously fed with reassurances but with the country still propping up the banks and little signs of growth we may yet feel the force of what a real recession is about.

  • Comment number 22.

    "providing credit to businesses and households that need it"

    Therein lies the problem for often people interpret need as want!

    Breaking up the banks will not make a blind bit of difference - the combined banks have weathered the storm better than single banks: NR, Lehmans, HBOS etc.

    But why let fact get in the way of a good story

  • Comment number 23.

    Sorry for the slightly off topic comment, Robert, but there is no other forum to show my gratitude for your initiative to educate the public about banks, money and related issues in your short clips on BBC3

    http://www.bbc.co.uk/programmes/b00rdzyc

    This is a good start but I feel you haven't gone deep enough and explain that not assessing the risk correctly (when the debtor is unable to repay) is exacerbated by the leverage some (all?) lenders take - they are not lending their money as in your example, but much more than that. This is, in my opinion, essential to understanding why we are in this mess and you should make it clear.

  • Comment number 24.

    The only election issue is to get rid of the crooks in Westminster; don't vote for any of them.

    They not only allowed the banks to steal our savings by gambling them away, they positively encouraged them to do it (while picking our pockets themselves).

  • Comment number 25.

    Teabaggers=Douchebaggers

    Whining conservatives comparing themselves to Rosa Parks and MLK is just too much for my stomach to take. Can anyone explain to me exactly what these crybabies are complaining about, anyway? I’m having a great deal of difficulty seeing how they are suffering under the moral equivalent of Jim Crow.

    ***UPDATE***

    So, I was making the new thing for the poems and on the wordpress mainpage I see this:
    Is that douchebag ACTUALLY WEARING A CLOAK!?!?!?!

    This guy totally plays D&D in his mom's basement.

  • Comment number 26.

    re25 .. sorry wrong thread

  • Comment number 27.

    We need a BBC Business Editor who is not so focussed on speculation,announcements, moves and events in government and the City.
    All this is merely dealing with superficial tinkering with fundamental problems in our society and economy.
    How are govermment ministers, who have little idea of real wealth production at the coal face, going to remedy the ills?
    I think this election will reveal the true extent of people's disatisfaction with politics i.e. people will not vote.
    Let us have an editor who is capable of asking the real questions that need to be answered i.e. What are the devolved administrations doing to tackle the enormous problems created by the closure of industries? What is being done, and what should be done, to re-train the workers? How is government encouraging the entrepreneur? What is being done to elevate the status of those that do things ( engineers, doctors, scientists) and reduce the status and remuneration of those who are in professions such as law, accountancy and banking?
    I am fed up with Peston's City-based revelations.

  • Comment number 28.

    #23. ReformNotRevolution

    Absolutely right....

    Golden opportunity here, but still no explanation for the masses about the true implications and horrors of fractional reserve banking. Why is that, Robert?

  • Comment number 29.

    Based on the assumption that the article is canvassing for opinion:

    Yes, for me the banking system is a big issue, but for most people I know, it isn’t.

    I reckon 99.9% of people don’t really understand how it works, so for 99.9% of people the main issue is likely the interest rate they are having to pay when the BOE base rate is 0.5%.

    Canvassing opinion from people I know, things like the expenses scandal and Byers, Hoon & Hewitt offering to influence policy for money, is more an issue than the banks.

    In any event having phoned ten people I know, the list of concerns went like this:

    NHS (e.g. no access to NHS dentist, drugs/treatment unavailable on NHS)
    Level of crime(particularly violent crime)& low level of punishment.
    Fraud and corruption in politics (MP’s expenses, cash for influence).
    Uncontrolled immigration
    Cutting of services (e.g. bin collection, repairing roads)

    No one voiced ‘level of taxation’ or ‘banks’ oddly enough.

    Actually nobody mentioned the national debt either, although that could be accounted for in the NHS or cutting of services category.

  • Comment number 30.

    Number 8 - don't shoot the messenger. Rubbish bank management should be reported, not censored. It wasn't RP who caused the run on the 'Rock.


  • Comment number 31.

    Didn't Darling also say in that Ch. 4 head-to-head that Northern Rock's business was perfectly sound and that it wasn't due to bad lending that it went under?

    Poppycock! It's model was to grow too big, too quickly, relying on short-term lending from the markets. When that dried up it was game over. That's not a sound business model. Surely Darling knows this? Therefore he's deliberately lying to us, trying to deceive us?

  • Comment number 32.

    It probably should be an election issue but will be interesting to see how much it is actually pursued by each party. The trouble for the government is that they need the banks to be good, not just to be punished with an international bank tax. HBOS and RBS took major risks in their investments and others like Barclays have been under investigation for tax avoidance. So basically were their any “well run” banks?

    Will we learn anything? Ironcially, Fred the Shred was being described in the media as ‘one of the City’s most respected financiers in 2008

  • Comment number 33.

    Banking and the ills it has and continues to create, its dominance in UK economic activity, and its contempt for all but its own objectives, its subjugation of parliament, and the massive debts that every man woman and child are burdened with, need to be part of the election debate.

    However whether or not the result of the debate can influence voters sufficiently to vote for the most competent team to run our on a knife's edge society, is anybody'd guess.

    After two years of pretty pith poor performance, and a lot of strife for 6-8 million people, its highly likely that the vote will go to the lot promising the biggest handouts to those who suffered.

    The hard hitting reforms that are needed to re-structure 'front-line' services to reflect the relative wealth of the majority will not be taken.

    We've spent the last 6 months at least in a pre-election limbo, ticking along and all the while letting the underlying issues fester and grow (they are not all financial). It leads to the question: what are they scared of if what they've done has been any good?

    So the voter is left with a stark choice. The encumbents, who led us into the crisis (despite promising otherwise), and have done a reasonable job of shoring up the sea wall, but have done very little for those most affected, and who have yet to offer the long-term engineering solution, and certainly will not abandon their state-dependency principles. The principal challengers who cannot shed their upbringing, don't know where to take the economy, and haven't the courage to stand up and say they need to lead us into some very painful times from which we will emerge ready to compete world-wide. And the spoilers who've got some interesting ideas but no mandate and will continue to be denied one despite probably commanding 30+% of the forthcoming vote.

    Any guesses on the election turnout?

  • Comment number 34.

    33. At 3:35pm on 30 Mar 2010, p45builder wrote:
    'Any guesses on the election turnout?'

    I think it will high.

  • Comment number 35.

    I know I’m probably against the consensus but I would imagine not really. The reasons being not many people really believe any party is going to be better than the others. The Tories are not going to force a discuss on the issues they are going to carry on with their “well we will tell you what we won’t do” and personal attacks answers to every issue out there

  • Comment number 36.

    It sure will be an election issue!, here is the deal the party that offers these things :
    1) Splitting retail banking from investment banking globally.
    2) Banning all commission based sales of ALL financial products.
    3) Put them all on flat rate salaries.
    4) Conduct a fraud investigation globally and send guys to prison.

    If no party offers that don`t vote for them they are crooks!
    This slump is not over by a long shot, the problem is still there lurking to raise its head again and next time no bail out cash let them fail!

  • Comment number 37.

    Lets also have a debate about how the banks, following bailouts One to Six ( including QE), refinance themselves and refinance their short maturing government-guaranteed wholesale finance and securitised assets. Job not yet done and posing one hell of a danger to growth. How are you going to break them up before they/?we solve this serious issue. Read the BoE Financial Stability report.

  • Comment number 38.

    Greed and inflated property values are the root cause of this global financial melt down. The so called intelligent university trained idiots that just followed a business theory or model that was lectured to them by University Economics professors.
    May be thats the problem now nobody really thinks anything through fully or question anything we all follow blindly what we have been taught by our masters. Because to do so would not be a good career move, the knodding dog scenario yes boss I will do that right away.

  • Comment number 39.

    In common with many others, I believe that no votes should be cast for LibLabCon. Vote for someone you can trust and kick the crooks out of Westminster.

  • Comment number 40.

    The banks wont be an election issue. They should be but they wont.
    Why not?
    Simple. It suits the government for the electorate to think that the government is in charge. Meanwhile the banks cover their smirk and cough gently.
    Why should the banks be an election issue?
    Equally simple. The banks are the economy stupid. Forget the deposits, credit to businesses and households.
    The banks own the failed housing companies. The banks failed too but the government wants to stay in power so that fact is conveniently forgotten. The now bank owned property companies can do what they like. They can use their owners money to snap up distressed assets. Land for building on. Heaven forbid anyone that thinks this is wrong. After all - the recovery of the banks means everything. So they just use the taxpayers wealth to guarantee their existence while nursing their own little fiefdoms. The property/building companies.
    Property needs to go up up up in price or else the banks would need bailing out again. By us.
    The banks simply look after bank owned entities.
    But will any of this be an election issue?
    Dont be stupid its the economy..

  • Comment number 41.

    May be a global fraud squad to police all of the global transactions?
    A team of police officers with a mix of highly trained auditors to track down the paper trail of all of these dodgy transactions.
    That have the power to raid any organisation in any country to gather evidence.
    No jurisdiction should be "off limits" including tax havens!

  • Comment number 42.

    Following up on my last point, I see the SEC is starting an investigation this morning in the United States please se the following BBC web page
    http://news.bbc.co.uk/2/hi/business/8594465.stm

    At last they are starting to investigate how Lehmans used the accounting rules to bury such losses!

  • Comment number 43.

    Take a look at this BBC webpage on bank lending or should I say the lack of it! Taking billions of pounds from the taxpayer yet lending out very little!
    No wonder there all declaring better figures !

  • Comment number 44.

  • Comment number 45.

    12. At 11:52am on 30 Mar 2010, Noideaatall wrote:
    Breaking up the banks so that the ordinary person in the street can better understand who does what is an inherently democratic thing to do.

    It will lead to greater transparency and a greater understanding on the part of the common man as to which banks do what.
    It's a solution that trusts individual people more to be able to make their own choices as to what they do with their money.



    I don't know if the banks need to be fragmented for the man in the street to know what they're up to. The basics of domestic banking are very simple: banks borrow money from depositors who can afford to lend to them, and sell it back at a higher price to those who need to borrow. That's all there is to it, really.

    He otherwise needs to know that the "Money Market" is a bulk operation between banks - same principle but it's between banks - one bank lends to another for the short term. It was once a way of allowing banks to balance their books to zero at the end of the day. Every bank had an account with the Bank of England. It was important not to be too much in credit because the B of E doesn't pay interest so selling a surplus to another bank would earn the bank interest. At the same time, a bank didn't want to hold a debit at the B of E because after a certain amount the B of E charged punitive interest and threatened the credit rating of the bank. It was a bad omen to be invited for lunch by the head of the B of E.

    What went wrong was that banks started to borrow in the Money Market short term to lend to customers long term (eg mortgages). So when the Money Market dried up (banks no longer trusted each other to repay), these banks were suddenly exposed to huge debts...simply because they couldn't borrow from other banks.

    Once you get into stocks and shares, the money market, derivatives and worse, the chance the ordinary man in the street has of understanding what's going on is rather slim (unless he cares to study the subject in some depth along with the business news for many years - or gets a job with a hedge fund). Most bankers and ALL regulators don't understand most of these financial instruments and the risks they carry. Only people with excellent and reliable intuition and loads of experience (like George Soros) understood what they were letting themselves in for.

    So, no matter how the banks are reformed the man in the street will need an enquiring mind to find out what's what. If financial institutions deliberately hide their problems or mislead their shareholders then we're all at their mercy.

  • Comment number 46.

    One thing I've hated about the crooked main parties is their eagerness to tax the banks even more. I was surprised (though disillusioned no more than otherwise) by Osborne talking about an extra tax on the banks. It's hard to stomach a conservative outfit piling extra tax on successful organisations - that's Labour's tactic.

    I'm none too worried about £1 million bonuses. If an employee has earned their company a £half-billion profit then £1 million is hardly excessive profit sharing. One has to keep a sense of proportion. Remember, it wasn't the banks' fault that they were put under stress, it was appallingly slack regulation, extremely low interest rates (that started the subprime business in America) and a government that fuelled an economic boom on credit expansion.

    I was galled last night that these wannabe chancellors claimed that no-one saw it coming. Many of us did. The bursting of the housing bubble was inevitable so was the crash of the investment banks once Bear Stearns went down. The housing bubble still hasn't deflated enough and the ludicrously low base rate is seeding the bubble afresh. Once that base rate reverts to 4 to 5%, well, wait and see. Yet the government insists on stimuli to keep properties turning over at bubble prices.

    When things start to fall apart again...yup, you got it, blame the banks. Easy target but it'll be a poor and misleading diagnosis.

  • Comment number 47.

    Yes Robert,

    Banks will be an issue in the election. Everything they have done has impacted on our lives.

    Our tax levels are under threat.
    Our schools are under threat.
    Our NHS is under threat.
    Our services, like bins, police are under threat.
    Our armed services will face an even harder financial time.
    Generations will see their possible prosperity ruined by what the banks have done and dare I say it, continue to do.
    Unemployment has risen. So people are not worried about a threat, they have already suffered.
    Businesses have gone bust or are struggling. More threats to the future and more suffering as a direct result of the action of the banks.
    House prices have been driven up why rich bankers pricing everyone else out of the market, have they not?
    Their extreme wealth and skewing of incomes probably encouraged MPs to go sticking their snouts in the trough more than they ever did too!

    In fact, the only thing the banks haven't had a direct or secondary influence on is the weather!

  • Comment number 48.

    The banks being an election issue is far to narrow a subject.

    Individuals, non-banking corporations, banks and government all played a part. Borrowing was endemic. Consumption was king.

    So, I'd like to think that the financial crisis might be an election issue. I'd like to think that this might lead to a wider debate.

    I'd like some discussion about the introduction of Basel II and the complicity of central banks.

    I'd like some discussion about the changes to the regulatory regime and light touch regulation.

    I'd like some discussion about the tax revenues including stamp duty by actions relating to these changes.

    I'd like some debate about pensions.

    I'd like some discussion about monopolies and mergers.

    I'd like some debate about corporation law.

    I'd like some debate about the role of the IMF and who they represent.

    I'd like some debate about leveraged takeovers.

    I'd like some debate about pre-pack administration and bankruptcy law.

    I'd like some discussion about unelected Lords being appointed to government and quasi government posts.

    I'd like some discussion about how to re-establish faith in parliamentary democracy.

    I'd like some discussion about personal responsibility.

    I'd like some discussion about employment and business development.

    I'd like some discussion about training nurses, plumbers, electricians.

    I'd like some discussion about the balance between reducing resource use and the impact on our society.

    Discussion about banks is tinkering at the margins.

  • Comment number 49.

    Banks should be an election issue because it was under Brown's incompetent watch that these banks and building societies were allowed to operate in the way they did. Not only were they allowed but they were ENCOURAGED to provide dodgy loans by Brown. He was happy to turn a blind eye when all the tax on bank profits were flooding into the Treasury.

  • Comment number 50.

    #48 mrsbloggs

    yeah, with you on that list and so many more, especially in the reform of the tax/benefits/dependency/survival costs mess for the least well-off.

    But let's get to the nub of the matter as to why such will not take place.

    What was one of the biggest consumer concerns of the last 3 years?
    The price of bread going over £1

    yep, that means how many? less txt's per day.....


  • Comment number 51.

    Lets have a big hand for all those 60's radicals, now pension fund holders, who brought down the system from within.

    Be careful what you wish for!!!

  • Comment number 52.

    #50

    Dear Mr P45builder

    I know I whistle in the wind.

    Its unfortunate that we cannot have a debate about the differences in circumstances between 1945 and 2010. Everyone (almost) has an indoor toilet, a bathroom, a fridge and a TV. Based on the level of obesity, I assume most people have enough food to eat. We live longer.

    This does not mean that there aren't people who can't look after themselves effectively (not those that won't).

    At the very least, there should be a discussion about

    Our collective finances are such a muddle its almost worth trying something like the following:

    Raise the minimum wage to 10 pounds an hour.

    Raise employee NI contributions to 10% on all earnings

    Cut employer contributions to 5%

    Compulsory minimum tax deductable pension contribution of 5% of earnings per annum to either a state scheme or private scheme - all workers.

    Tax credits for any pension contributions up to minimum wage level which can offset tax on savings income.

    No Income tax on the equivalent of minimum wage for 40 hours per week.

    10% tax on the next 20,000

    5% extra tax on the next 20,000

    5% extra tax on the next 20,000

    5% extra tax on the next 20,000

    5% extra tax on everything above this.

    Single benefit/pension payment equivalent to minimum wage less NI payments.

    Minimum age to draw down pension from any scheme to be raised to 60.

    Double child benefit but make this payable on only the first two children.

    Get rid of all other benefit payments/subsidies/freebies/considerations except housing benefit which should be capped.

    Do away with personal tax allowances using minimum wage rate as start point for income tax.

    Introduce VAT on confectionary, snacks, fat/oil products, cakes and biscuits.

    Increase duty on all alcohol products by 20%.

    Increase capital gains tax on assets held for less than three months to 35%, for less than six months to 30%, less than a year to 25% and less than two years to 20%.

    Reinstate the tax break on dividends to pension funds.

    This could not be worse than the current take from one hand give back with the other approach.

  • Comment number 53.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 54.

    At 05:47am on 31 Mar 2010, mrsbloggs13c2


    And I add to the list the following for discussion:


    Why are politicians still spouting drivel about AGW/climate change and taxing us on the basis of a fraudulent scientific conspiracy?

    Why does Labour pay taxpayers money to the Unions and then receive this money back from the Unions for it’s own political purposes?

    How much debt are we carrying for the PFI’s?

    Who are the shareholders in the Bank of England?

  • Comment number 55.

    Will Banks be an election issue?

    It should be but maybe the electorate don't realise the banking crisis is only over for the Banks but not for us.

    Most people think we are through the worst - maybe they have not seen the worst yet. Everyone seems to have forgotten that the government is holding the toxic debt on our behalf, not the Banks. When the merry-go-round comes to a grinding halt because we, the consumers, are not purchasing goods to cover the borrowing - well, that's when we will hear the screaming.

    Does anyone actually think that any of the Political Party's actually want to be voted into government to deal with the devastation cause by the Banking crisis.

  • Comment number 56.

    Bottom line is ALL western nations are in for a period of stagflation similar to Japan.Were goods remain on shelves and nobody buys them, the problem for the western governments is they are itching to put up interest rates to start the claw back of the cash to pay down the toxic debt.
    They will claim the fear of inflation as the main excuse to put up interest rates, but we have no inflation! If nobody buys anything pressure on prices is down not up! So there lies the problem for who ever gets in power,my view is we have years of stagflation that lie ahead with house prices dropping about 40% like Ireland.
    Nobody in there right mind is going to take on more debt when they know the claw back of the bank bail out money has not even started yet.
    Where does that leave China?, well the only place soon were they can sell all of there product is internally in China. They have already started to think like that they know demand will slump in the west.

  • Comment number 57.

    It sure will be an election issue!, here is the deal the party that offers these things :
    1) Splitting retail banking from investment banking globally.
    2) Banning all commission based sales of ALL financial products.
    3) Put them all on flat rate salaries.
    4) Conduct a fraud investigation globally and send guys to prison.

    If no party offers that don`t vote for them they are crooks!
    This slump is not over by a long shot, the problem is still there lurking to raise its head again and next time no bail out cash let them fail!

  • Comment number 58.

    Micheal Moore sume it up to a tee in this video.
    A Harvard Professor explains how ordinaryy folk have been well and truely conned.Take a look its amazing!

    http://www.michaelmoore.com/books-films/capitalism-love-story/press/dvd-extras

  • Comment number 59.

    Sorry click on the 2nd link down on the left titled how wall street got away with murder.

  • Comment number 60.

    We all know that credit cards are bad news for the consumer , eg the 19-30% APR thats applied to them etc.Consumers have realised that a personal loan or overdraft is a far cheaper option to sort your finances out.
    But look at the tactics being used by the banks to get people using credit cards again, there losing revenue because people are changing there habits.

    http://news.bbc.co.uk/2/hi/business/8598557.stm

    Suddenly your credit rating for a loan is no good so you are being forced in to using your card!, nothing more than crooks in suits.
    Then they say they don`t need regulating , its despicable whats going off!

  • Comment number 61.

    It's got to be. We've all got a responsibility to make sure that these white collar criminals are not allowed to re offend.The decrepit system that shields their nefarious activities has got to be radically overhauled and in future miscreants need to face criminal proceedings!

    Keep it in the news - sign up for the Robin Hood Tax - don't let these slimeballs off the hook.

  • Comment number 62.

    I see the gambling has started again, but this time with taxpayers stimulus money after the crash. The hedge fund managers have all received massive bonuses for 2009!http://ca.news.yahoo.com/s/afp/100402/business/us_europe_finance_investment_pay_banking_hedge

  • Comment number 63.

    Is it really about banks??? Is it not about CENTRAL banks and the mortal embrace between banks and governments? http://bit.ly/b6PTFL

    I've just read what we're up against thanks to Chatham House: Beyond the Dollar ~ Rethinking the International Monetary System. See http://bit.ly/bzvBxY

    Since debts are legally enforceable, money has become a pure tool for control. No more medium of exchange. No more facilitation of trade. To the contrary: the financial industry bankrupts the real economy. See "The Purpose of the Credit Crisis", as it revealed itself through an analysis of the budget over the last 10 years. See http://bit.ly/aGrAbn

    Banks BETTER be an election issue. But only as an awareness raising exercise. Because business will go on as usual, for the "debt designers" have everthing under control - unless Britain gets merry and follows the track of the Robin Hood Tax and dares to take a lead - as the tip of an iceberg of other changes to follow!

    Sabine
    Organiser, Forum for Stable Currencies
    http://forumforstablecurrencies.info


 

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