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Will the chancellor regret creating the Banking Commission?

Robert Peston | 10:09 UK time, Thursday, 23 December 2010

One of the bigger stories next year will be the recommendations of the Banking Commission set up by the chancellor on how to increase the safety of our banks and enhance competition between them.

What is increasingly clear to me is that this could cause something of a political car crash, in that there is no chance that the commission will say that the status quo is acceptable. Of the five members of the commission, not one believes that the way banking in the UK is organised today is either sensible or sustainable.

Mr Osborne leaving a cabinet meeting, 21 December

Mr Osborne leaving a cabinet meeting, 21 December

That means the chancellor is likely to be presented with proposals which will be hated by much of the City and by an influential contingent of his own party. The Commission's recommendations - due to be put forward in preliminary form in April - may well therefore precipitate something of a war both between the banks and government and within the government.

None of which is to say that I know precisely what the commission will propose. It is too early in the process to be sure of that. But the members' identification of the problems tells you that what they'll eventually say cannot be anodyne.

Their starting point is that if they were designing a banking system from scratch, it would look almost nothing like the banking system we have.

First and foremost, they believe that it is profoundly unhealthy for the UK to have banks which insist on the freedom to operate how they like (including paying whatever bonuses they like) and yet could not carry on in business without implicit or explicit financial support from taxpayers on a colossal scale.

So one challenge for the commission is to come up with a structural reform that would make banks, bankers, their shareholders and creditors completely liable for the business mistakes of banks' managements, without putting at risk either the savings of retail depositors or the integrity of the payments and credit-creation systems.

That will mean forcing banks to hold substantially more capital - tens of billions of pounds more - to absorb potential losses. This will be neither cheap nor easy for the banks to raise (and may take the form of debt that automatically converts into equity capital in certain circumstances).

And it will also mean - subject to agreement in the EU (which won't be simple to obtain) - some kind of credible separation of retail banking and the money-transmission mechanism from banks' more speculative activities (which could mean splitting banks or putting in place robust firewalls and barriers within banks so that savers' money can't be tainted by investment banking).

What I think the commission wishes to build is a new structure for the banking industry in which it is perfectly clear that the investment banking parts of Barclays and Royal Bank of Scotland, for example, won't in any circumstances be rescued by taxpayers - so that if they get into trouble, all the pain of that trouble falls on commercial investors and creditors.

The onus for Barclays and Royal Bank in those circumstances would be to prove that their investment banks are viable, profitable businesses. Which they will not find easy. Because right now those banks are able to borrow at cheaper rates, since creditors know that they'll be bailed out by taxpayers if the banks get into difficulties (see my earlier post How to curb bonuses for more on this).

Funnily enough, proposals to enhance competition between banks could also make it easier to ring-fence the bits of banks that can't be allowed to fail because of the consequential damage to the economy.

The main obstacles to effective competition are the inertia of consumers - our reluctance to switch banks - and the difficulty for new banks and smaller banks in obtaining access to essential financial infrastructure, such as the money-transmission or payments system.

If the money-transmission system were regarded as a utility, a bit like the national grid in energy, then it could be regulated both to preserve its integrity and to make sure that smaller banks were allowed to use it at a price that permitted them to generate a decent return.

This could involve forcing the big banks to de-merge the vital payments infrastructure into standalone, service utilities - which in theory could have benefits both for competition and in ensuring that when a bank got into trouble there would not be a serious risk to wider commerce.

What it will all boil down to for the Banking Commission is this: how to let bankers who want to be entrepreneurial do their stuff, without having the comfort of knowing that if it all goes wrong for them, we as taxpayers will pick up the bill. It won't be easy or uncontroversial.

Comments

Page 1 of 2

  • Comment number 1.

    greed is good...get over it

  • Comment number 2.

    Interesting and probably the single most important descision UK has to make since desiding to declare war on Germany in 1939.
    However, a commision formed in the UK has to be biased and open to pressurre from within. Surely a desicion on such a National direction change such as this should be made by first obtaining the best possible advise from The World Bank and the German Bundesbank. Such advise should then be the base line for a UK commision to make recommedations having first published the external report for UK consumption and general comment. (is this old Crumbly suggesting a referendum?)
    Camelot36

  • Comment number 3.

    Did the commision notice that Northern Rock, Bradford & Bingley, HBOS fell over without having any investment banking arms.

    The commision appear to have an agenda without actually looking at the facts of the things that caused the problems in the UK.

  • Comment number 4.

    Glad you're back on track Robert. Leave the Telegraph to Nick Robinson!

    "the recommendations of the Banking Commission "
    Not requirements, so they won't happen whatever good common sense they advise.

    It'll be the politicians who decide and if the banks can't run rings round them I'll eat my Christmas hat.

  • Comment number 5.

    Any review that ignores the substantial public ownership of our banking system as an asset is wasting its time. There should be a strategic public sector element in the banking market. All banks need to be supervised and not just regulated and the government needs to take more responsibility for the creation of credit and pay down of debt. Stop trying to pretend that monetary policy is non political and only for geeky technocrats in a private financial seance.

  • Comment number 6.

    All this user's posts have been removed.Why?

  • Comment number 7.

    "That means the chancellor is likely to be presented with proposals which will be hated by much of the City and by an influential contingent of his own party. The Commission's recommendations - due to be put forward in preliminary form in April - may well therefore precipitate something of a war both between the banks and government and within the government."

    -------------------------------------------------------------------------------

    This paragraph speaks (nay shouts) volumes. If the populace can't see what's going on here and who's agenda Governments are currently following then they deserve everything they get.

    Fascism!!

  • Comment number 8.

    Has the meeting taken place between the Banks/Gov yet - as postponed for Osborne's snow delay? No, I shouldn't think so, cos this is something for all of us tax payers (and not tax avoiders) so it'll just be another whitewash and the banks win AGAIN as do their millionaire friends in the Government. This is disgusting because next month we'll see the bonuses.

  • Comment number 9.

    The world is full of a spectrum of ideas. It's just a shame that ideas such as urbanpiglet head this particular instalment of possibly the most enlightened blog in the UK.

    Regular readers of this blog will have hopefully have followed such links as [Unsuitable/Broken URL removed by Moderator] and know that there is an alternative that would not only work but also address the ever growing economic divide.

    Surely the government advisors have done their homework too? In which case it should not be too arduous a task for them. God forbid a political agenda, however, the only sure fire way to make the wrong decision for the good of the country.

  • Comment number 10.

    When you refer to the shareholders most people do not realise that pension funds have traditionally favoured financial services share holdings because of their previous relative security and good returns. For shareholders anyone with a pension should read "us!"

    Now, as a shareholder, I think I feel a little more comfortable knowing that the organisation my future income is in may be underwritten by the taxpayer.

    Making the banks hold more capital will take more money out of the economy and further increase the tightening on lending to householders and to businesses. Restricting the availability of lending will inevitably push up rates making business expansion even more expensive.

    As for the utility element of banking being protected in another way I can smell the emergence of an "ofbank" appearing - and lets face it what benefits have any of the other "ofs" been able to deliver to consumers. Judging by what I pay for my other utilities not a lot. The "ofs" are however a very effective way for the government to get themselves off the hook. An "Ofbank" would give the public someone to complain to and provide politicians with someone to point the finger at.

  • Comment number 11.

    Robert,
    If its not a political car crash then they have not done their job right. The banking system, and even more importantly the monetary system is no longer fit for purpose; in fact it never was. The Commission should present the best new solution in its findings, and in my view that is monetary reform and the removal of fractional reserve banking and the creation of a interest free state medium of exchange. If the government and the current banks dont like it thats tough. If the government choose not to implement it, then it will be for all to see where their allegiances lie.

  • Comment number 12.

    I am confused (not unusual).
    If RBS and Barclays can only make their investmnent banking arms work on cheap credit from their retail arms how can Goldman Sachs and other investment only banks do so well?

  • Comment number 13.

    "That will mean forcing banks to hold substantially more capital - tens of billions of pounds more - to absorb potential losses. This will be neither cheap nor easy for the banks to raise (and may take the form of debt that automatically converts into equity capital in certain circumstances)."

    -----------------------------------------------------------------------------------

    So, NOT real capital then merely book capital. Why am I feeling uneasy about this?

    In the race against time I'm afraid time is going to win this one.

  • Comment number 14.

    All this user's posts have been removed.Why?

  • Comment number 15.

    "What it will all boil down to for the Banking Commission is this: how to let bankers who want to be entrepreneurial do their stuff, without having the comfort of knowing that if it all goes wrong for them, we as taxpayers will pick up the bill. It won't be easy or uncontroversial"

    ---------------------------------------------------------------------------------

    Well I'd say you've answered your own question there Robert. Stop the bankers being "entrepreneurial" and doing "their stuff." - See it is easy.

  • Comment number 16.

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

  • Comment number 17.

    I know Important People read this blog, so I'll toss this into the pot: i) a ban on profit; ii) a maximum salary of £100,000; a minimum salary of £20,000; iv) abolishing the age and concept of retirement.

  • Comment number 18.

    Anyone contemplating the prevailing manner by which the banks are organised in this country can see the inherent risks and injustices within that arrangement. It is good to know that the Banking Commission is coming to the same conclusion as the rest of us. It is not right and something must be done and done soon.

    Of course this is going to upset vested interests but surely if government is to mean anything it has to be about protecting the private citizen from arbitrary events such as banking crises. If government fails to grasp this nettle then government itself becomes a mechanism by which taxpayer funds are syphoned off to pleasure a few both here and elsewhere in the world.

    Furthermore banking reform must not be allowed to stand on its own as it has to be just one element in a wider restructuring of the UK economy that makes it possible once again to manufacture a far larger range of value-adding products within the UK.

    I wholly understand that this may need a European context but we should not allow supposed opposition within Europe as an excuse for bottling essential reform in the UK. I do not believe that the EU will oppose any reasonably presented proposals as they are as much concerned as to the instability of banks as anyone else.

    Banking reform and a push for full employment are two essentials if our country has any future. Any part of the political class which finally embraces these two issues and drives them forward with all its will can expect to dominate British and even European politics for the next generation. Does anyone have the guts?

  • Comment number 19.

    NO AUSTERITY WITHOUT BANKING REFORM

    Banking reform needs to happen fast. Otherwise events like these in Greece will start happening here.

    'A mob attack on a politician in broad daylight has highlighted how desperate Greeks are becoming about political decisions'
    http://www.guardian.co.uk/world/2010/dec/19/greece-george-papandreou-austerity

  • Comment number 20.

    This sounds promising - but I wouldn't trust the Tories for a minute not to delay and obfuscate - in order to protect the vested interests of the bankers - if they were left to their own devices.

    We are basically counting on Lib Dem influence to ensure our government once again doesn't cop out and deliver us all into the hands of the money-men.

    We really do need a revolution in banking.

    The system has been so unsatisfactory for ordinary people for so many decades, and even worse in the last twenty years, with the explosion in intermediary and derivative instruments creating these enormous new supplies of 'money' which is nothing but a big heist designed by those who make a living from it.

    Thank goodness there are a few new ideas emerging which take the bankers out of the equation [Unsuitable/Broken URL removed by Moderator]

  • Comment number 21.

    "Unsafe at any speed".... (Ralph Nader 1965 about Cars - but he could have been writing about our 'wonderful' international banks.)

    The way that banks account is inadequate. This flows through to the way they are audited. (Quite apart from the independence of auditors - which is a global inadequacy.)

    Banks have been permitted to become too complicated for anyone or fro the organisation to comprehend or assess the risks. The complexity needs reducing we must move to simpler structures and motto has to be KISS (Keep it Simple Stupid).

    The incentives within the banks and the industry are ludicrously separated from the risks - this has to stop. Here remuneration consultants are the culprits and their influence must be completely stopped.

    I remain an advocate of a global remuneration strategy (and not just for banks) and in the UK we need to start with a National Maximum Income set at 20 times the National Minimum Wage (as per David Cameron's idea.)

    Radical reform must be introduced to force the whole financial community to become a service to commerce and trade - and prevent them from being an extension of the gambling industry. Here my idea is to make many of the kinds of contracts they write unenforceable at law (just like gambling contracts).

    My suggestion is that all contracts written by banks and financial services business must first be approved and if they are not approved then they are unenforceable at law. This would prevent ingenious and very unsafe writing of daft types of business such as the Credit Default Swap and various futures and options where the purpose is just gambling and not the covering of real positions. All selling, writing and buying of non-allowed contracts would be a criminal offence. All existing non-allowed contracts should be made void ab-initio. We have to drive the gamblers out of business.

    That is a start....

    (Yes, I want to work towards a radically different society! - but can we afford not to do so?)

  • Comment number 22.

    "Of the five members of the commission, not one believes that the way banking in the UK is organised today is either sensible or sustainable."

    Right - better get smearing that lot then - maybe we'll get one of our 'paper owning friends' to perform a few sting operations so we can get rid and replace with people a little more favourable.

    "What it will all boil down to for the Banking Commission is this: how to let bankers who want to be entrepreneurial do their stuff, without having the comfort of knowing that if it all goes wrong for them, we as taxpayers will pick up the bill. It won't be easy or uncontroversial."

    Yes Robert, 'not easy' is an understatement, for any amount of logical thought will produce these conclusions.

    1) Banks can never grow so large as to endanger the Economy
    2) Some of the existing banks (both pseudo-public and private) will need to be broken down to achieve this.
    3) Regulation will be required to stop them growing over a certain size

    The problem is that this regulation will have to be decided and implemented by somebody (the Government) - to which there is a) a cost to the taxpayer and b) it means essentially a beaurocrat will be deciding how finance is run (and we'd all like to know which 'uncorruptable beaurocrat' they have in mind for that job)

    In addition to this you will have greedy banks who won't want to limit (or reduce) their huge profits gleaned through monopoly and economies of scale - so they will be busy hiring lawyers to find ways of 'staying big whilst looking small to the regulator'

    ....and then we'll have the same problem - I mean you have got rid of TBTF but the rammifications of many small banks failing simultaneously will be the same (just ask the fed how it's federal insurance fund is these days)

    My favourite is this piece of free market nonsense.

    "The main obstacles to effective competition are the inertia of consumers - our reluctance to switch banks"

    ...add to that switching power firms, switching car insurance, switching pension arrangements, switching Telephone providers etc...

    I mean has anybody considered that we consumers - might actually have something better to do with our time than spend it switching at the drop of a hat?

    What this actually means is "the participant behaviour theory of free market economics requires rationality and a wealth of accurate and timely information for the consumer - and consumers don't behave like that - but rather than change the theory - we'll just blame consumers"

    Nice work if you can get it - your theory is failed so you blame the components!

    Maybe we're simply discovering that choice is but an illusion in the free market - I mean all the above were deregulated under the banner of 'choice' - but how many people have been through all the utility companies already and discovered that the differences are either minute - or temporary (causing you to have to switch again). I know I have for one.
    It was better when there was just 1 provider, as long as we knew we were getting a good deal then we should all be happy. Publicly owned and run utility companies should have no interest in profit for anything other than re-investment - so I will know I'm getting the best deal possible.

    Private companies cannot do this - so by default we're getting a worse deal - the only way in which private suppliers can present 'a better deal' is by reducing the costs of labour (by paying less) and as we have seen this is eventually detrimental to the Economy (I mean what do you really think made people go and borrow loads of money? - declining wages is the source of that problem, not a sudden rush of blood to the head producing recklessness)

    Even if the commission isn't a whitewash or watered down - then they won't have a hope of implementing any of it - you can hear the groans of the bankers already.

  • Comment number 23.

    Reading through your comments this morning is really encouraging if these are the types of recommendations the commission is likely to come up with.

    It sounds as if someone at last has been able to appoint the right people for the right job.

    If the rest of the country has to go through reform and restructuring then the least we deserve is for the banks to do the same.

    That way the pain will be a little easier to bare.

    As far as support from Europe is concerned I think they will be desperately seeking ideas themselves when the pressure once again falls on the Eurozone.

    They shouldn't look a gift horse in the mouth.

  • Comment number 24.

    The Banking Commission may have some unpalatable recommendations to make, but any failure by the government to act, will be widely seen as a climbdown by a party that favours a political class and it's natural alliegences to the banks, to the democratic desire of the electorate to see UK financial institutions regulated to run their businesses without the need for further subsidy from the taxpayer. I will predict bigger public protests by the citizens of our fair land, than those seen in recent 'student fee' demonstrations.

  • Comment number 25.

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

  • Comment number 26.

    19. At 12:49pm on 23rd Dec 2010, DebtJuggler wrote:
    NO AUSTERITY WITHOUT BANKING REFORM

    Banking reform needs to happen fast. Otherwise events like these in Greece will start happening here.

    'A mob attack on a politician in broad daylight has highlighted how desperate Greeks are becoming about political decisions'
    http://www.guardian.co.uk/world/2010/dec/19/greece-george-papandreou-austerity
    .................
    If there was ever a country getting close to "revolution" then it is Greece. Its getting very close to exploding now, and yet their government continues to ignore the will of the people. Politicians should never forget they are there to represent the people, and if the Government, not matter how much they disagree, fails to accept the peoples views then they face being dispensed with.

  • Comment number 27.

    Always remember that they have ways of taking the money out of your pocket without touching the pocket or the money. That's what they will be doing next year mostly, never mind the blah blah.

  • Comment number 28.

    12. At 12:29pm on 23rd Dec 2010, AnotherEngineer wrote:

    "If RBS and Barclays can only make their investmnent banking arms work on cheap credit from their retail arms how can Goldman Sachs and other investment only banks do so well?"

    They get cheap credit from the markets - and the Fed.

    Also you might find that GS changed their status in the US when the crisis began in order to protect themselves from collapse and so they can raise more money (from retail).
    http://news.bbc.co.uk/1/hi/7628578.stm

    A lot has happened in the last 3 years - and some of the details were brushed over at the time.

    It's a bit like a confidence trick - whilst one distracts 'the mark' with a crisis event - the other helps himself to the wallet.

    However - all this aside, all banks have been enjoying cheap credit since Greenspan lowered rates to avoid a recession in 2001 when the bubble burst - and banks took gleeful advantage of it (without questioning where it came from and what the consequences might be)

    ...a bit like sweets left out for children to find who then eat them until they are physically sick.

  • Comment number 29.

    10. At 12:19pm on 23rd Dec 2010, mark_savill wrote:

    "When you refer to the shareholders most people do not realise that pension funds have traditionally favoured financial services share holdings because of their previous relative security and good returns. For shareholders anyone with a pension should read "us!""

    ...and what of 'us' who didn't buy into this crooked private pension scheme peddled by a combination of snake-oil salesmen and corrupt Governments?
    I mean are we to be punished for making the right decision?

    It's not my fault the country trusted their future retirement income to fund managers who invested it in financial companies who essentially 'faked' their returns by abusing easy credit - a fakery which has now been revealed and you have the reverse.

    You can't play the "we're all in this together" card on pensions because not everyone has one. It was the free choice of workers to join these pension funds - why should all the taxpayers underwrite them - a contradictory stance when you consider the uproar in the taxpayer underwiting public pensions!!!

    In addition to this - there is the contradiction that whilst Sir Fred left with his pension intact - his mismanagement actually destroyed the value of millions of future pensioners - not really a fair result is it?

    ...and I can't wait until someone actually tells the next generation that they're expected to pay for it all -and show then what that means. They are going to burn us all out in response and we only have ourselves to blame for allowing successive Governments to screw us over in favour of the banks.

    So please, before you spin this line of "you're only hurting yourselves by hurting the banks you know" - consider the hypocritical position you are taking.

  • Comment number 30.

    1. At 10:47am on 23rd Dec 2010, urbanpiglet wrote:

    "greed is good...get over it"

    So is crispy fried bacon...
    Oink Oink!

  • Comment number 31.

    Why does a country need to go into 'debt'? Surely a sovereign nation can print its own money as needed. Who do we owe our national debt to? The Icelandic people took back control over their system of government. We need to look to their example before tinkering with the present casino system of banking..

  • Comment number 32.

    Robert, can I make a suggestion - long overdue I feel - to you and your moderator, namely that this Comment section be split into two parts, one for discussion of economic and business matters, and the other for the apparently-endless repetition of largely-irrelevant political rants.

  • Comment number 33.

    26. At 13:10pm on 23rd Dec 2010, Averagejoe
    19. At 12:49pm on 23rd Dec 2010, DebtJuggler

    Do you know what they were chanting yesterday?

    "We can't take anymore"

    ....in time Britain......in time...

    It looks like the anti-revolutionaries have knocked off early for Christmas....maybe when we all come back in the new year there will be the signs of growth we were promised last Christmas.....and the one before that..

  • Comment number 34.

    'Parasite':

    noun

    1 a plant or animal that for all or part of its life obtains food and physical protection from a living organism of another species (the host) which is usually damaged by and never benefits from its presence.

    2 derog; a person who lives at the expense of others, contributing nothing in return. parasitic or parasitical adj. parasitically adverb.

    3 derog; bank; banker; politician

    ETYMOLOGY: 16c: from Greek parasitos someone who lives at another's expense

  • Comment number 35.

    WITH APOLOGIES TO Another Brick in the Wall Part 2 (Waters)

    We don't need no Banking Commission
    We dont need no credit control
    No new arrivals in the clearing house
    Commissioners leave them banks alone
    Hey! Commissioners! Leave them banks alone!
    All in all it's just another trick from Whitehalll.
    All in all you're just another trick from Whitehall.

    We don't need no Basel ratios
    We dont need no investment /high street separation
    No new arrivals in the clearing house
    Commissioners leave them banks alone
    Hey! Commissioners! Leave them banks alone!
    All in all it's just another trick fromWhitehall.
    All in all you're just another trick from Whitehall.

    "Wrong, Do it again!"
    "If you don't make yer profits, you can't have any bonuses. How can you
    have any bonuses if you don't make yer profit?"
    "You! Yes, you behind the bikesheds, stand still laddy!"(Yes you , Osborne!)

  • Comment number 36.

    32. At 13:27pm on 23rd Dec 2010, viewfromabove wrote:

    "Robert, can I make a suggestion - long overdue I feel - to you and your moderator, namely that this Comment section be split into two parts, one for discussion of economic and business matters, and the other for the apparently-endless repetition of largely-irrelevant political rants."

    Why - do you think politics and economics are disconnected?

    I was going to ask it was split into 2 parts too - one for items relating to the blog and another for all the complainers who want free speech curtailed.

    Do you have a point to make about the banking commission - or was your intention merely to stop others making their points.

    I do apologise for repeating myself (you call it ranting) - but when people are trying to live in fantasy it takes a lot of repeating of the same logical argument to bring them out of it!

    Of course if you disagree you must say so - but I get the feeling the reason you're complaining is because you cannot disagree with what has been said.

  • Comment number 37.

    I know it's an old cliche, but pretty apt for this time of the year:

    "Turkeys will not vote for Christmas."

    Simple.

  • Comment number 38.

    "Will the Chancellor regret creating the Banking Commission" is the title of Robert Peston's blog.

    Can you summarise your posts, Robert, for the majority and feeble-minded, like me? Otherwise, what is the point of a professional blog that requires interaction from it's readers by definition?

    Or, perhaps professional journalist's blogs are not designed for, or interested in, the public's response?

    I mean, is there a 'response factor' - that is measured by your employer?

  • Comment number 39.

    Surely the problems now faced could have been avoided had reform been made a precondition for government assistance? Why wasn't it? The government could have guaranteed deposits and not forwarded further assitance unless undertakings were given that certain reforms would take place. The right time to do it was then, when the banking system was in dire need of help - and not now -when they already have the taxpayer's money in their coffers. We have a passive, unimaginative political establishment in charge and no changes of any importance are likely to be made. A little tinkering here, a little tinkering there, the status quo of the banking system will remain largely intact.

  • Comment number 40.

    We know the present system allowed a catastrophe to happen. We know it can't be allowed to happen again. We know, therefore, new rules need to be in place. We know the city will squeal like a stuck pig.

    Get on with it.... now....today.... If the rules were in place 12 months ago we wouldn't be discussing excesive bonuses AGAIN now. Stop dithering.

  • Comment number 41.

    32. At 13:27pm on 23rd Dec 2010, viewfromabove wrote:

    "Robert, can I make a suggestion - long overdue I feel - to you and your moderator, namely that this Comment section be split into two parts, one for discussion of economic and business matters, and the other for the apparently-endless repetition of largely-irrelevant political rants."

    Better watch out guys, next thing we know we'll all be extradited to Sweden..............

  • Comment number 42.

    I don't normally read much into surveys (as they can be wholly inaccurate of public sentiment)...however I was very interested to see last night the ITV news produce a survey - one question was
    "Are we going to see more of scenes like this (the student riots) in 2011"

    A massive 79% said yes - a phenomonal result for any survey, anything over 60% is usually a landslide opinion.
    How sad for all those hoping this would all blow over - it seems nearly 4 out of 5 people are expecting a fightback from the public.

    The banking commission can meet and recommend anything it likes - I have a feeling it will be the people who have the final say on this one.

    Clearly the Government are in denial of this - does anyone feel comfortable with a Government which is ignoring the predictions of 80% of the population?.....and what are the chances a Government so out of touch is going to make the right (right for the people) decisions on banking, media tycoons and other major decisions required in the future?

    ...and yes, I expect he gets up everybody's nose....

  • Comment number 43.

    #21 John_from_Hendon mentioned Ralph Nader's "Unsafe at any speed"

    I too have pondered the similarities between Nader's (a lawyer by profession) one-man-crusade against the might of the US auto industry in the 50's and 60's and the current battle against vested financial interests post The Credit Crunch.

    This is worth further comment because ALWAYS remember....Nader WON.

    This was despite the powerful auto industry's many attempts to discredit this most determined lawyer. They even tried to undermine him by the use of the 'honey-trap' ploy (that seems to have made a comeback of late). However, he was above all of their devious attempts to defame him.

    http://en.wikipedia.org/wiki/Ralph_Nader

  • Comment number 44.

    41. At 13:44pm on 23rd Dec 2010, James wrote:

    "Better watch out guys, next thing we know we'll all be extradited to Sweden.............."

    I'm already in solitary in Wandsworth! (not the prison, I just didn't do the washing up last night)

  • Comment number 45.

    You managed to go about 2 days without an article attacking the banks Robert.

    Bravo.

  • Comment number 46.

    It might be worth going back to the days when 'I promise to pay the bearer on demand the sum of X pounds' meant something. That material being sterling silver, a commodity with real instrinsic value that can't be inflated into nothingness by a central banker with a printing press or keyboard. There is a reason that usury was frowned upon down the ages as being immoral

  • Comment number 47.

    Robert,

    'It won't be easy or uncontroversial.'

    Why?

    We had Glass-Steagall before and we can have it again - not really controversial at all.

    Or do we need our cousins across the pond to blink first?



  • Comment number 48.

    31. At 13:25pm on 23rd Dec 2010, ford7777777 wrote:
    Why does a country need to go into 'debt'? Surely a sovereign nation can print its own money as needed. Who do we owe our national debt to? The Icelandic people took back control over their system of government. We need to look to their example before tinkering with the present casino system of banking..
    ..................
    Unfortunately it cant, thats why we need monetary reform. Have a look at the Positive Money Web site for more info.

  • Comment number 49.

    WOTW wrote "It was better when there was just 1 provider, as long as we knew we were getting a good deal then we should all be happy. Publicly owned and run utility companies should have no interest in profit for anything other than re-investment - so I will know I'm getting the best deal possible"

    You mean like the old BT. You may not remember in the 1970s - you had to wait sometimes months for a new phone line, which you would probably have to share with half the street, you could only connect BT approved equipment (which was expensive and pretty horrible) and overseas calls cost ££s per minute.

    Or maybe you mean something like the old British Leyland, producing (at least when workers were not on strike) unreliable cars that few people wanted to buy.

    I suppose you are going to mention water companies. The old water board managed to construct Kielder reservoir, the biggest white elephant in Europe. Under competition we have higher prices but much cleaner beaches, cleaner water. You could mention Thames Water as the biggest leaker of water in the country ...but it is repairing pipes at a higher rate than every happened under public ownership including pipes which were leaking 50 years ago

    I seem to remember you in an earlier blog lauding the ability of the internet to deliver all the information a central planner needs (wrong but why let little details get in the way). Well the internet is a very useful tool to let customers compare prices and switch to a cheaper/better supplier. Some of us do not switch because although we might get a cheaper deal elsewhere, the service we currently get is consistently good and so we stick with the supplier we know even if it costs more

  • Comment number 50.

    what you are confusing here is a) those banks which operate the UK financial system (i.e. mostly the high street banks - RBS, Lloyds, HSBC, Santander, Barclays but not Standard Chartered and you could argue that HSBC and Stan Chart are really foreign oeprating banks with large staffs in London) and b) those banks which operate in the City which are foreign owned and NOT subject to the review but which employ tens of thousands who all pay huge amounts of tax and did not take UK taxpayers money (or in some cases, any taxpayers money). In addition plenty of people have forgotten that Northern Rock (and the Dunfermline) collapsed despite NOT being part of any City-type investment banking. This reporting does nothing to clarify that position - perhaps that was the intention?

  • Comment number 51.

    5. At 11:40am on 23rd Dec 2010, watriler wrote:

    "There should be a strategic public sector element in the banking market."

    I can see the value of this. We have a dual economy with a private and public sector. The strengths of both the German and Japanese economies appear to lie in their vast array of small/medium size businesses. In an information economy it seems likely that the future of economic growth in the UK will rely on specialised businesses who aren't getting much support at the moment.

    Additionally, I think that the housing market and mortgage system needs to be seriously rethought. Even at the level of the degree of transparency with regards to how mortgages are sold. Mortgage sellers are vague about the total final cost of a house purchase. I fail to see how the total cost of a mortgage can be justified compared to the nominal purchase price of a house.

    Is this uncompetitive?

    Perhaps someone can enlighten me.

  • Comment number 52.

    It’s all bad news for the housing market where deposits of 30% are already required to get a mortgage. The cost of home ownership is bound to get higher as capital requirements increase.

    When HSBC and Standard Chartered move away from the UK to Asia, taking thousands of jobs with them, shareholders can rejoice. And who could blame them when forever they are tainted by the bad banks created by Gordon Brown and a hostile media who fail to appreciate the uniqueness of the city.

  • Comment number 53.

    WOTW wrote "It was better when there was just 1 provider, as long as we knew we were getting a good deal then we should all be happy
    ==================
    How did you know that you were getting a good deal if there was just 1 provider?

  • Comment number 54.

    Yes - the time to add restrictions and controls was before our cash was handed over to the 'Banks'. Guts were needed to do this - the last lot still haven't found any. All they and their hangers on do is try to destroy any move to clear up the mess they made, no attempt from them to dig us out, then. Remember their pensions are secure - unlike mine!

  • Comment number 55.

    • 49. At 14:04pm on 23rd Dec 2010, Justin150 wrote:


    I seem to remember you in an earlier blog lauding the ability of the internet to deliver all the information a central planner needs (wrong but why let little details get in the way).
    ……..
    Funnily enough as an independent reader of that debate, I don’t recall you providing any convincing evidence to suggest it was “wrong”. But then why let those little details get in the way of your views; something you are particularly good at.

  • Comment number 56.

    "There should be a strategic public sector element in the banking market."

    I can see the value of this. We have a dual economy with a private and public sector. The strengths of both the German and Japanese economies appear to lie in their vast array of small/medium size businesses. In an information economy it seems likely that the future of economic growth in the UK will rely on specialised businesses who aren't getting much support at the moment.

    Additionally, I think that the housing market and mortgage system needs to be seriously rethought. Even at the level of the degree of transparency with regards to how mortgages are sold. Mortgage sellers are vague about the total final cost of a house purchase. I fail to see how the total cost of a mortgage can be justified compared to the nominal purchase price of a house.

    Is it uncompetitive? I find maths a bit tiresome but my understanding is that the final cost of a house purchased using a mortgage is about 2.5x the original cost not taking into account inflation.

    This seems exortionate. Would you pay £25k for a £10k car?

    Doesn't this seriously reduce the purchasing power of homeowners or are the amounts paid to banks more useful in terms of providing them with funds to loan out to businesses?

    Perhaps someone can enlighten me.

  • Comment number 57.

    10. At 12:19pm on 23rd Dec 2010, mark_savill wrote:

    "Now, as a shareholder, I think I feel a little more comfortable knowing that the organisation my future income is in may be underwritten by the taxpayer."

    Mark, I understand your concerns but I'm not sure it is fair for the tax payer to underwrite your private pension. A lot of people do not own shares. You are taking a risk owning shares - a risk that a vast amount of taxpayers cannot afford to take. And where would it end? Anyone who owns shares for whatever purpose have concerns about their future income.

  • Comment number 58.

    49. Justin150:


    The Police force and the Military seem to do a very good job despite being run by the state. But then the government need them to function, otherwise, well, there wouldn't be a government would there?

    It seems the state can get things right. When it chooses to.

  • Comment number 59.

    #49

    Just because a public untility could be run better - doesn't mean it needs to be privatised.

    Most are sold off because the UK governments needs the money to service our debt instead.

    Plus the average houshold cost for water services in Scotland (public) is less than it is in England (private).



  • Comment number 60.

    51. At 14:11pm on 23rd Dec 2010, i wrote:
    Additionally, I think that the housing market and mortgage system needs to be seriously rethought. Even at the level of the degree of transparency with regards to how mortgages are sold. Mortgage sellers are vague about the total final cost of a house purchase. I fail to see how the total cost of a mortgage can be justified compared to the nominal purchase price of a house.
    ==================
    I am sure that I have seen the total cost quoted, but it is not really very helpful because a) not many people stay in the property for the whole term b) many people re-mortgage c) the interest rate will probably change d) the cost of renting an equivalent house needs to be deducted and how can anyone predict what rents will be in 20-25 years.
    As for being uncompetitive, if you borrow the same amount from different lenders at the same interest rate then the total paid will be the same, but that is down to arithmetic and I don't think anyone can change that.
    (in fact there may be slight differences because of the way that they calculate the interest daily, monthly etc)

  • Comment number 61.

    Robert - surely the time to comment on the findings of the commission - is when the Commissions findings are published! There really are other news stories upon which you could comment - you are after all the BBC Business Editor, not the BBCs Banking Editor!!!

    I rarely post on the this site but I do wonder if "writingsonthewall" is a member of the public or one of your staff?

  • Comment number 62.

    • 52. At 14:16pm on 23rd Dec 2010, thomas betham wrote:


    When HSBC and Standard Chartered move away from the UK to Asia, taking thousands of jobs with them, shareholders can rejoice. And who could blame them when forever they are tainted by the bad banks created by Gordon Brown and a hostile media who fail to appreciate the uniqueness of the city.
    ……………….
    Exactly what “bad banks” did Gordon “create”. What utter nonsense.

  • Comment number 63.

    What a pity Gordon Brown didn't come up with the idea of a Banking Commission thirteen years ago. But would he have taken any notice of their findings, like his total neglect of house price inflation, when the money was flooding into the Treasury? I doubt it.

  • Comment number 64.

    17. At 12:46pm on 23rd Dec 2010, alex wrote:

    "I know Important People read this blog, so I'll toss this into the pot: i) a ban on profit; ii) a maximum salary of £100,000; a minimum salary of £20,000; iv) abolishing the age and concept of retirement."

    Interesting.

    I like ii) and iii) in principle. Perhaps the £100k limit could be exceeded only where reinvestment was going to take place?

    Without profit then investment would be impossible. Perhaps time taken would then be the measure of efficiency?

    I don't think people are ready for this though, but a national referendum on wages regarding the £20k/£100k limits would be very interesting indeed.

    The minimum wage does nothing to support consumer demand. Henry Ford paid his workers a decent wage so they could afford to buy his cars...

  • Comment number 65.

    #53

    There is still really only 1 provider for rail, energy, water etc.

    Trains -regional.

    Water - regional.

    Gas -- all UK suppliers buy from the same market

    etc


    Determining a good deal means looking at other regions / countries.

    For example - we currently have some of the highest rail fares in Europe - not a good deal!!!

  • Comment number 66.

    #61

    Damned if he does and vice versa.

    Keep up the good work Peston. They don't like it up 'em..

  • Comment number 67.

    See/ Listen to this Link....http://www.youtube.com/watch?v=Tkstrexj3ds

    Is it true that 25 individuals in New York are going to make as much money as 658000...Yes SIX HUNDRED AND FIFTY EIGHT THOUSAND Teachers.

    I honestly cannot believe this or if it is true then there is something far wrong with Wall Street.......The City is probably similar......Questions ought to be asked....Why not ask the PM.?

  • Comment number 68.

    21. At 13:02pm on 23rd Dec 2010, John_from_Hendon wrote:

    Great post.

    "I remain an advocate of a global remuneration strategy (and not just for banks) and in the UK we need to start with a National Maximum Income set at 20 times the National Minimum Wage (as per David Cameron's idea.)"

    What about if the NMaxW was set so that it was 20x the Minimum wage paid per organisation. That way the companies involved would have to go above the minimum wage if they wanted to make the ridiculous earnings they desire. That way everybody benefits in that the NMinW would be exceeded and it would lessen the inevitable threat of taking business abroad? Tax revenues across the board would also increase.

  • Comment number 69.

    #42. writingsonthewall wrote:

    I don't normally read much into surveys...

    Unless they reinforce your own view of the world, obviously.

    ...one question was "Are we going to see more of scenes like this (the student riots) in 2011"

    A massive 79% said yes - a phenomonal result for any survey, anything over 60% is usually a landslide opinion.... does anyone feel comfortable with a Government which is ignoring the predictions of 80% of the population?


    I'm sure you're not so stupid that you mistake expectation for support? I also expect to see further violence from mobs masquerading as students next year, but that does not mean to say I support it.

    You also seem to forget that the people who responded to this survey are the very people who you dismissively refer to as "sheeple" when they collectively hold an opinion that you disagree with.

  • Comment number 70.

    #65 newblogger wrote:

    "For example - we currently have some of the highest rail fares in Europe - not a good deal!!!"

    -------------------------

    It's certainly not a good deal with this level of service...

    'Christmas getaway: train companies cancel up to 25pc of services'
    http://www.telegraph.co.uk/travel/travelnews/8221340/Christmas-getaway-train-companies-cancel-up-to-25pc-of-services.html


  • Comment number 71.

    67. At 15:00pm on 23rd Dec 2010, coplani wrote:
    See/ Listen to this Link....http://www.youtube.com/watch?v=Tkstrexj3ds

    Is it true that 25 individuals in New York are going to make as much money as 658000...Yes SIX HUNDRED AND FIFTY EIGHT THOUSAND Teachers.

    I honestly cannot believe this or if it is true then there is something far wrong with Wall Street.......The City is probably similar......Questions ought to be asked....Why not ask the PM.?

    ...........
    Yes, and what’s more its being going on for a long time without you noticing. Pretty surprising considering that the good old USA is practically insolvent. Still inequality in america is the heart of the american dream.

  • Comment number 72.

    This will be about changing this and that. I am sure they will not make any reference to the criminal scheme that caused it all.
    Wonder if they will require the banks and financial institutions to repay the individual retirement accounts that were robbed by the bankers and financial institutions....probably not. This is about financing government and the people and their concerns do not matter.
    In the end, the depositor will still be naked to the abuse of banking and financial institutions and there will be nothing that provides personal responsibility for those who engage in these reckless behaviors that benefit them and hurt everyone else.
    It is still about the ruling class. We will all be asked to feel reassured because our governments will be providing greater oversight......weren't they doing that before?

  • Comment number 73.

    22. At 13:05pm on 23rd Dec 2010, writingsonthewall wrote: My favourite is this piece of free market nonsense.

    "The main obstacles to effective competition are the inertia of consumers - our reluctance to switch banks"

    WOTW, I agree entirely. We are preparing for a future in which everyone spends there entire day doing "deals" for every transaction they engage in. The alternative is that you don't bother (there aren't enough hours in the day) so you pay more.

    People would spend more if they didn't feel obliged to spend so much time trying to get clear market information. I buy less as a result of these convoluted "deals".

    Marketing departments (especially those working for a supermarket beginning with T)love this tactic to screw more money out of consumers as I'm sure you know. A national campaign promoting the virtues of simplification would work wonders in cutting through this malign obfuscation.

    We are addicted to tying ourselves up in complicated knots. Usually it is a ploy to get away with murder. (tax system, banking system, retail, law)

    Welcome explanation of one of the the causes of debt in this country too.

  • Comment number 74.

    Robert,

    I wish to complain about the posting of largely irrelevant complaints about the posting of complaints (especially those that differ from my own complaints!) e.g. 32. At 13:27pm on 23rd Dec 2010, viewfromabove

    Let's live in a Fox News complaint-free world. Anyone remember 'Reactionary Bob'? Ahead of his time maybe?

    http://www.youtube.com/watch?v=YZXFdikh-70

  • Comment number 75.

    @42. writingsonthewall wrote:

    "The banking commission can meet and recommend anything it likes - I have a feeling it will be the people who have the final say on this one."

    The Banking Commission hasn't been set up to "have the final say", but to examine and make recommendations. I'd be very surprised if any of its members thought otherwise.

    "what are the chances a Government so out of touch is going to make the right (right for the people) decisions on banking...?"

    You may be right but why not wait and find out?

    I'm quite sure that a self-appointed Tribune of the People such as yourself won't have been short of opinions on the subject. So did you go to the trouble of submitting your views in response to the Commission's "Call for Evidence"?

    Or would it have suited your polemical purposes better if this government had never set up the Banking Commission, or appointed to it the apparently reform-minded people it did? Would you prefer to have such matters decided on the streets?

    I suggest one should be careful what one wishes for (I happen to be reading Figes's history of the Russian revolution at the moment...).

  • Comment number 76.

    49. At 14:04pm Justin150

    Lots of things didn't work in the 70s. This is a different era with a far greater proportion of educated people in society. Central planning should get easier the more skilled people there are. The NHS has a higher public approval rating than most private companies. The rail system is a nightmare - and I don't see many privatised companies dealing particularly well with the weather we have at the moment - often as a result of cost cutting exercises.

  • Comment number 77.

    @45. Againstthetide wrote:

    "You managed to go about 2 days without an article attacking the banks Robert."

    Would you care to defend them?

    We're all ears.

  • Comment number 78.

    Ho Hum...... yet another banking story... change the record! YAWN!!!

  • Comment number 79.

    60. At 14:36pm on 23rd Dec 2010, AnotherEngineer :

    I understand mortgages are complex and its difficult to foresee exactly how much it will cost over the entire term but I am concerned that the sheer amount of profit from interest is still extortionate given the original cost of the property. I'm not convinced that the 150% increase in overall cost is justified. I still remain unconvinced that banks are truly competitive in this area.

  • Comment number 80.

    @50. Peter Bench wrote:

    "This reporting does nothing to clarify that position - perhaps that was the intention?"

    What reason do you have to suppose that? I don't see what "clarifying" it would have had to do with the blog's subject, which was to look ahead to possible outcomes of the Banking Commission's enquiry. Where's the "confusion" you allege?

    "Accordingly, when making recommendations in relation to the “UK banking sector”,
    the Commission will include within its scope not only the UK operations of UK-owned
    banks and mutual societies, but also foreign operations of UK-owned banks and UK
    operations of foreign-owned banks. Shadow banking institutions – such as hedge
    funds and securitisation vehicles – which are not regulated to the same degree as
    banks but which carry out some of the functions that are typically conducted by banks
    (such as maturity transformation) will be considered to the extent that they impact on
    the banking sector and/or the likely efficacy of the Commission’s recommendations."(quoted from the Commission's "Issues Paper")

    "you could argue that HSBC and Stan Chart are really foreign oeprating banks with large staffs in London)"

    Correct me if I'm wrong but does not HSBC own Midland Bank (as well as firstdirect)? and are these not UK retail banks?

  • Comment number 81.

    IT LOOKS LIKE APRIL MIGHT BE TOO LATE!

    'Baltic Dry Free Fall Accelerates'
    http://www.zerohedge.com/article/baltic-dry-free-fall-accelerates

    and today…

    'Baltic Dry Index Drops Another 1.9%, Hits 1,795'
    http://www.zerohedge.com/article/baltic-dry-index-drops-another-19-hits-1795



  • Comment number 82.

    I forgot to add to my #81

    I was in HongKong in Jan 2009...and trust me, NOTHING was moving in HongKong harbour.
    http://en.wikipedia.org/wiki/Baltic_Dry_Index#Impact_of_2008_financial_crisis

  • Comment number 83.

    #76.

    "Lots of things didn't work in the 70s. This is a different era with a far greater proportion of educated people in society. Central planning should get easier the more skilled people there are. The NHS has a higher public approval rating than most private companies. The rail system is a nightmare - and I don't see many privatised companies dealing particularly well with the weather we have at the moment - often as a result of cost cutting exercises."

    The railway system is a nightmare because for far too long it was in the hands of the state which preferred to spend taxpayer money in other areas, especially sacred cows like the NHS, and left the railways, water, gas, electricity, telecoms, etc badly neglected and underinvested.


    British Rail fares may be amongst the highest in Europe but gas prices are amongst the lowest. And where would be if the food industry had been nationalised? In our graves or dying from starvation as happened to millions in China and Russia.

  • Comment number 84.

    Max is in London

    http://maxkeiser.com/

  • Comment number 85.

    #55 OK averagejoe: provide the hyperlink to the website that lists in real time the complete and up to date position of all the UK population (both individual and businesses) wants and needs.

    If such a website exists then I am wrong

    If it does not then I am right.

    My point which WOTW does not want to accept is very simple and very old. Central planning can only work if the information the central planner has to make economic decisions is complete and up to date. WOTW maintains that the internet will provide that information, I maintain it does not. WOTW believes that with a couple of mates it should be easy to knock up the website to provide that information in a couple of weeks - if it was that easy someone would have done it already.

  • Comment number 86.

    69. At 15:08pm on 23rd Dec 2010, rbs_temp wrote:
    "I also expect to see further violence from mobs masquerading as students next year"
    .........
    Really, I was understanding that they were students. Or perhaps "masquerading" doesn't mean "disguised". All this protest must come as a surprise to you of course, as its only a recession.

  • Comment number 87.

    83. At 16:18pm on 23rd Dec 2010, sandy winder wrote:
    And where would be if the food industry had been nationalised? In our graves or dying from starvation as happened to millions in China and Russia.
    …….
    Don’t worry, with the current and ongoing commodity price inflation we may still get there anyway. Interesting that the Chinese have introduce price controls for basic food stuffs though so the poor can still eat, or were you not aware of that? I’m sure the government would be happy to do the same here if prices became unaffordable, wouldn’t they?

  • Comment number 88.

    78. Milkybardave wrote:

    "Ho Hum...... yet another banking story... change the record! YAWN!!!"

    Code for:- "Lay off the banks!"

    You wouldn't happen to work in the finance sector, by any chance...?

    Because if you don't, and this is your attitude, you deserve everything they dish out.

  • Comment number 89.

    t 15:41pm on 23rd Dec 2010, i wrote:


    Lots of things didn't work in the 70s. This is a different era with a far greater proportion of educated people in society. Central planning should get easier the more skilled people there are. The NHS has a higher public approval rating than most private companies. The rail system is a nightmare - and I don't see many privatised companies dealing particularly well with the weather we have at the moment - often as a result of cost cutting exercises.

    Not sure why central planning (which will never work in a complex society over more than a few years) would be easier because the population is more skilled. Surely it would be more difficult as educated people are less likely to simply obey orders and may have more eclectic tastes.

    ===================================

    #59 wrote "Just because a public untility could be run better - doesn't mean it needs to be privatised."

    I agree. Warwick raised the issue of the army and the police force (not sure many members of the public who have sufffered from crime would agree that it is being well run). There are very good social and political reasons why they should not be privatised even if they could be run better by the private sector.

    ===================================

    HMRC has one of the lowest approval ratings amongst its employees of any organisation in the UK - not sure what that proves though as to whether private or public is better.

    Incidentally it is not the (private) train operating companies who have responsibility for clearing the tracks but (public owned) network rail. SO you have to blame the public sector for the transport chaos caused by snow on rail. Personally I would blame neither as in UK (well England mostly) we do not deal with snow very well.

  • Comment number 90.

    85. At 16:21pm on 23rd Dec 2010, Justin150 wrote:
    #55 OK averagejoe: provide the hyperlink to the website that lists in real time the complete and up to date position of all the UK population (both individual and businesses) wants and needs.

    If such a website exists then I am wrong

    If it does not then I am right.

    My point which WOTW does not want to accept is very simple and very old. Central planning can only work if the information the central planner has to make economic decisions is complete and up to date. WOTW maintains that the internet will provide that information, I maintain it does not. WOTW believes that with a couple of mates it should be easy to knock up the website to provide that information in a couple of weeks - if it was that easy someone would have done it already.
    ............
    Neither of you are right or wrong, because as far as we know no-one has even tried to do it. If you provide evidence that they have and have failed then you are correct. Conversely just because no one has tried it, does not mean its impossible.
    This is what bugs me. Dont claim victory without demonstrating it. I need facts.

  • Comment number 91.

    Yes, separation is crucial: no more holding the tax payer to ransom.

    Here's a couple more ideas to prevent them causing another disaster in a few years (and getting away with it) ...

    1) To the extent that the taxpayer does underwrite them - the retail banks will still have this - make them pay a realistic premium. Just like my insurance for my car or my house. The more risks they take the higher the premium. Get someone in from the insurance industry and pay him a nice big bonus for running the scheme.

    2) Put in place lloyds of london style unlimited liability for their losses. If their gambling banks make a big profit and they get big bonuses: good for them. If they make a big loss then we pursue them for the dosh. Take their houses, ferraris, pension funds etc etc. Let them sign on for benefit and pick up litter alongside all the decent people they made unemployed this time around. Back it up with criminal penalties, extradition powers, jail sentences etc, if they evade the liability.

    If the new systems mean they want to leave the country, so be it. On the current system they are too expensive to keep.

  • Comment number 92.

    Afternoon Robert,
    we all know that since the banking crisis in 2007 (yes 2007) NOTHING has been done to address the causes, hence the setting up of a committee (best Sir Humphrey practice).
    As previous bloggers point out, nothing will be done which harms the rake off that these banking parasites (with apologies to parasites) can make.
    My solution is very simple but also will not be implemented due to vested interests.

    We need to split the banks up as the USA is doing (so it can be done if there is the political will). We need to REMOVE regulation of banks (after all it didn't work last time and it costs a lot).
    This would also have the benefit of dealing with the bonus issue as well. QED.

    For the edification and delight of Justin150, maybe you would like to google "UK Water Privatisation - a briefing", written by Emanuele Lobina and David Hall via PSIRU.
    It may help you to understand why privatisation is not desirable for water companies?

    As an aside, Robert, I just received my energy bill from Npower yesterday and they have Doubled my direct debit per month. I think that when Christmas festivities are over, peoples energy bills are going to come as a bit of a shock (but not if you're an MP and can charge it to the taxpayer).

    Happy Christmas to all bloggers here.

  • Comment number 93.

    Robert...they are not really "our banks" even if we taxpayers hold a majority shareholding in them.

    But no doubt they WILL be our banks if the toxic assets or poor investments cause them to make a loss. I think you clever folk call that the "socialisation of loss" don`t you?

    But it`s got a lot worse in the last few years ....because nations don`t really exist any longer ....now we are (all of us) enmeshed in a vast global financial system or "free market" ....which exercises so much power/influence over "our" governments and economies that we now have what you might call the "NATIONALISATION of loss"...... whereby folk like Osbourne are obliged to spend our taxes and borrow more money simply to prop up other parts of America`s financial empire in countries like Ireland and Iceland and the old Soviet Union..... that have been snuck into the EU to become a liability to us.

    I want the BBC to start asking what`s in all this global financial wizardry for ordinary English people like me ...rather than continue acting as though England is a part of the USA.... and Wall Street`s profits automatically benefit us in Britain.

    I raise this because in the last century there was an uncanny relationship between Britain`s declining fortunes and the rise and rise of the USA...and it`s real friends in Germany and Japan and more recently in China and Russia!And I can`t help recalling WC Field`s dictum about "never giving a sucker an even break"!!!

  • Comment number 94.

    The problem is our banking system is out dated. In this internet enabled world transfers can be immediate, individual savings can be managed automatically by an internet enabled home pc, processing debit card purchases is cheaper than processing cash payments and should attract a discount for the purchaser.

    Hence there is much more to do then merely separate the retail and investment parts of banking to preserve the public purse.

    To these ends 3 important changes are needed.
    1/ Current accounts should be classified as trusts to remove them from the bank's credit and debit totals and rid us of the need for a tax payer guarantee.
    2/ The payment and transmission system between current accounts must be made immediate and put under the control/subject to a single body such as the BoE or Mint.
    3/ Lending, borrowing, investing, etc, should be left as banking functions with no enforced separation between retail, commercial and investment banking. And by extension no guarantee by govt. Bonds, savings accounts, mortgages, overdrafts, etc are simple investments whose interest is relative to the risk of the investment.

    UK Banking faces the end of it's large and dependable investment income sources. The tax payer guarantee is unaffordable. Long term house price rises being above wage rises and inflation arose because increasing numbers of women joined the workforce. That is over.

    Banks will have to change. Business lending will become an investment that requires nurturing. High street banking will attract fees. Debit card use will attract savings on purchases.

    Over next 10 years banking and financial services will transform themselves in to the model I've alluded to above. London can be the source and home of that change, or a victim of it.

  • Comment number 95.

    My understanding of the financial markets has been transformed over the past three years. Rightly or not, the important lessons I have learned include the following:-

    Banks are not the socially responsible institutions I once believed them to be.

    'Investment' is not based on fundamentals - it has evolved into pure speculation.

    Professional experts are not really that smart - they are slaves to academia.

    Many theories about finance and economics have been utterly discredited.

    "Greed' and the 'Herd-Instinct" now dominate all markets. Morality is extinguished.

    Crises appear inevitable, and are occurring at a more frequent rate.

    The 'Financial Prima-Donna' is now a socially disruptive force.

    Politicians are subservient to the demands of the 'market'.

    A cashless society has led to an explosion of debt.

    The concepts of 'value' and 'worth' have been sacrificed on the altar of 'profit'.

    Western national debts are, in many cases, out of control.

    'Quantitive Easing' is a soporific that will create unimagined damage in a few years.

    We do not appreciate the looming crisis that an aging population will unleash.

    The taxation option is approaching it's societal limit.

    We will not survive another crisis of this magnitude.

    etc ... etc ...


    With these thoughts in mind, I try to imagine what changes are required to the structure of the banking sector. I'll just stick with one:-

    SEPARATE RETAIL BANKING FROM INVESTMENT BANKING BEFORE IT IS TOO LATE!

    PS: My apologies if I have bored you.

  • Comment number 96.

    The commission might find an appropriate solution but as that well known political analyst Groucho Marx said regarding politics and politicians
    "Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies."

  • Comment number 97.

    It should be remembered that the Bible oulaws 'usury' and that Jesus drove out the money changers and that the prohibition of Banking was such a tenet of Christianity that Banking was predominently operated by members of the Jewish faith (Rothschilds etc) who had no such prohibitions. Our whole modern world is now being turned upside down because of extremes of banking activity and naked GREED.
    Members of the Moslem faith must also be feeling particularly smug because they also prohibit Usury.

  • Comment number 98.

    69. At 15:08pm on 23rd Dec 2010, rbs_temp wrote:

    "Unless they reinforce your own view of the world, obviously."

    No - which is why I applied the caution to reading too much into the figures. If you can provide a survey which is so one sided where people think "this is just a recession" and "it will all blow over" then I'd be happy to see it.

    "I'm sure you're not so stupid that you mistake expectation for support? I also expect to see further violence from mobs masquerading as students next year, but that does not mean to say I support it."

    I didn't say support did I? - but remember you were so adamant that there wouldn't be a revolution and yet 80% of these people surveyed believe that there are going to be more 'revolutionary scenes' like the ones we've already seen. It's interesting that these are now 'mobs masquerading as students' - how many more excuses will you roll out before this thing is over?
    You're starting to look more and more out of touch mate.

    "You also seem to forget that the people who responded to this survey are the very people who you dismissively refer to as "sheeple" when they collectively hold an opinion that you disagree with."

    Ah the sheeple may hold different views - but even they're not so stupid as to deny history and to realise that the people who suffer these cuts are not going to take it lying down.

    Maybe I'm wrong, maybe the sheeple are a tiny number - but just well represented on this blog.

    All I will say is that 3 years into this crisis and according to you this should have all passed us by - and yet it's still here.

    Clearly you don't like this fact - which is why you're always so keen to try to prove me wrong - and yet time passing is proving your hope over logic was failed from the start - as it always will be.

    Come the new year you will see mobilisation like you haven't seen in your lifetime - however you'll probably write it off as 'street thugs in wheelchairs' or something - because one thing you seem unable to do is accept the truth.

    It's not a good way to go rbs_temp - denial of reality will eventually damage your psyche - it's better to face the truth head on.

  • Comment number 99.

    49. At 14:04pm on 23rd Dec 2010, Justin150 wrote:

    "You mean like the old BT. You may not remember in the 1970s - you had to wait sometimes months for a new phone line, which you would probably have to share with half the street, you could only connect BT approved equipment (which was expensive and pretty horrible) and overseas calls cost ££s per minute."

    ...don't you think that was more to do with the technology at the time? Crikey you Capitalists really mix up your 'profit' from your 'progress' don't you?
    The inefficiencies have simply been passed to the consumer - that's why you have to keep switching (or suffer being ripped off) - or can't you see that?

    "Or maybe you mean something like the old British Leyland, producing (at least when workers were not on strike) unreliable cars that few people wanted to buy."

    ...or like the VW plant which is part owned by the workers? Just because political games were played with old industries - it doesn't prove a thing. Yes BL should have been shutdown, but the problem was they had no alternative. What do you think all those workers are doing now? first they worked for Rover - and now they're claiming dole - very efficient, I wonder what the cost of all that is to the taxpayer compared to the cost of keeping the factory going?

    "I suppose you are going to mention water companies. The old water board managed to construct Kielder reservoir, the biggest white elephant in Europe. Under competition we have higher prices but much cleaner beaches, cleaner water."

    ...of course - which is why the water companies are continually in the regulators dock receiving fines - oh yes, much better.

    "You could mention Thames Water as the biggest leaker of water in the country ...but it is repairing pipes at a higher rate than every happened under public ownership including pipes which were leaking 50 years ago"

    No it isn't - Thames water has more leaks now than ever before - and it's pushing the cost of fixing those leaks onto the consumer - higher bills. Of course you could excercise your 'free market choice' and stop using water I suppose.

    "I seem to remember you in an earlier blog lauding the ability of the internet to deliver all the information a central planner needs (wrong but why let little details get in the way)."

    Wrong? - I don' recall you disproving it. In fact I seem to recall you struggled to comprehend it - possibly because you're living in a bygone era.

    "Well the internet is a very useful tool to let customers compare prices and switch to a cheaper/better supplier."

    ...what like this???

    http://www.bbc.co.uk/news/business-12062834

    "Some of us do not switch because although we might get a cheaper deal elsewhere, the service we currently get is consistently good and so we stick with the supplier we know even if it costs more"

    One born every minute I guess - we'll see how long that attitude lasts when the prices start rising.

    Justin150 - just because you say it, it doesn't mean it's true. You keep banging on about the improvements the free market has provided but none of these claims ever stand up to much scrutiny.

    Sure the free market hasn't been a total waste of time - it's given us all the choice of 500 TV channels - but the point you miss is that there still isn't anything on!!!

  • Comment number 100.

    85. At 16:21pm on 23rd Dec 2010, Justin150 wrote:

    "if it was that easy someone would have done it already."

    Oh that's brilliant - if it were possible it would have been done already.

    Now if you think hard Justin150 even you might work out why it hasn't happened - try to think about who would benefit and who wouldn't.

    Cripes this blog is going down the pan - some people need to brighten up or they're going to be in big trouble when they discover the way the world actually works!

 

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