The Tories develop their de facto Glass-Steagall Act

Naomi Langford-Wood

A good article. So difficult to put issues clearly when this has all been chewed over again and again but not resolved.

Setting a divorce of retail from investment sounds ok in principle, but - there had to be a but - there are some things we should not overlook:

1. Currently, if you look behind the good profits being announced, losses and greater per capita costs in retail banking are being supported by its highly profitable investment banking brother, in many of the international banks.
2. Banks have always been regulated and want to find ways round the regulations. Therefore they have always been as children with parents who let them play games.
3. The sub prime mortgages in the USA were initially promoted by Mr Obama's predecessor when he pronounced the mantra; 'All Americans should own their own home and I want to see an SUV in every driveway'.
3. He then told the banks and mortgage lenders to lend more than people could afford to pay back and that the citizens should own a gas guzzler to boot.
4. The bubble chasing infected the whole system and even Gordon Brown encouraged UK mortgage lenders to lend more than asset value on the basis that he had banished boom and bust.
5. Some banks are already moving away from our shores because of the sword of Damocles being threatened.

The restoration of the good old Bank of England, with its proper regulation of the banks would be the best answer. It always worked before and there were several precarious situations that were dealt with without alarming the public and causing runs on banks.

And the cost of the highly paid FSA, and their bonus culture can be swept aside. How can a quango be entitled to bonuses?

Luke

So de facto seperation will not drive the banks oversees but de jure seperation will?

I am confusus

Victor Southern

I think that the international aspect of investment banking has already destroyed a vast quantity of the nation's money. If they want to play roulette then by all means let them do it in some other jurisdiction. Iceland for instance.

TomTom

So the Investment Banks simply pay more for depositors' funds a la Icelandic banks and draw in the money they need. The deposits are still insured. Or they offer retail depositors immunised bonds linked to equities just as Lehman Bros did through British Building Societies.

The fact that retail products are offered by a Mutual Building Society does not stop them being underwritten by a Lehman or insured by an AIG...that is the nature of Derivatives bundled for Retail Investors.

Glass-Steagall was a 1930s measure which had long been circumvented by hybrid products. Derivatives themselves must be controlled by making RISK and LIABILITY an exposure on the Issuer's Balance Sheet and explicitly so.

That means PFI as much as CDO

Liz Brown

I am still waiting for Coffee House to comment on Andrew Neather's admission that Liebour has deliberately flooded the UK with immigrants.............

DangerDave

Glass-Steagal is exactly what is needed both here and in the US and then the investment banks can go pop without affecting needing to be bailed out if they take excessive risks.

This won't happen however because of how well connected the like of GS and JPM etc are politically and the same applies here.

George Mannion

What about better professional regulation of people in the banking industry.

E.g. Professional Code of Conduct that they publicly swear to abide by, annual random tests of bankers on ethical matters etc.

There's perhaps alot to learn from the health professions on how to instill ethics at the heart of professionalism.

TomTom

Naomi L-W obviously means Bill Clinton because it was his Administration that repealed Glass-Steagall on 12 November 1989 because Sandy Weill of Travelers-Citigroup wanted it done. The quid po quo was that Republicans agree to the beefing up of The Community Reinvestment Act 1977 which subjected any mortgage lender redlining districts ie refusing mortgages in areas of high Hispanic or Black population (and ergo low income) would face full Anti-Discrimination investigations under Civil Rights legislation and be prevented from merging with other institutions.

Fannie Mae and Frediie Mac had Clinton appointees that went on a loan spree.

You are right Naomin, George Bush should have reversed this policy and brought the US economy back to reality...but he failed and became a spendthrift too with stimulus package after stimulus package.....but it was Clinton that opened Western markets to China whose goods suppressed the retail inflation that created the property boom

Kevyn Bodman

I've got SKY NEWS on now,11.10am UK time and Osborne is giving the speech.
He doesn't seem to have those clear plastic screens, either side and at eye level,to read off.
So he's looking down and to the left at his script.
Not nearly as impressive as the politicians APPEAR to be when they've got the technology.
And a sign of laziness?
Yes, there are some phrases he needs to get exactly right to coincide with what he is 'expected' to say.
But shouldn't he be master enough of his sybject and his argument to make almost all his speech just from brief notes and/or paragraph headings on a couple of postcards?

Yes, he should.

Publius

@Liz Brown
"I am still waiting for Coffee House to comment on Andrew Neather's admission that Liebour has deliberately flooded the UK with immigrants............."

I second that.

Kevyn Bodman

Liz Brown and Publius

You are right. But it's not just Coffee House at fault.
I've only read aboput this despicable policy on 3 minority interest blogs.
The MSM isn't robust enough to take it on and treat it as the huge story it is and to highlight the enormity of the politicians' actions.

Frank P

Liz Brown and Publius;

Albeit off topic, I think you probably have the support in that regard of the vast majority of punters hereupon. As it is not being addressed, one can only deduce that the conspiracy may extend to this organ of the media. But let's give them time; the day has hardly started and it is mooted that Cameron is working up to a major speech on the subject. Perhaps they don't wish to pre-empt his thunder with weak flashes of their own coruscation. In the meantime we can dream of a Phoenix rising from ashes of conservatism who can rise to the occasion at this dire moment in our Islands' histories.

Pete Hoskin

Liz Brown, Publius et al: I gave the Neather story a mention in my post yesterday:

http://is.gd/4CneK

I know it's only a quick mention, but it does mean we haven't completely ignored it. Will give it some more thought...

Irene

Liz Brown - me too.

This is the Mail's version.

http://www.dailymail.co.uk/news/article-1222613/Labour-let-migrants-engineer-multicultural-UK.html

Verity

The Daily Mail ran with it the minute it broke.

strapworld

Liz Brown, Pubilus, Kevyn Bodman,Frank P, Irene.

Perhaps Mr Nelson has had a D Notice slammed on him? Or else they are, as Margaret would say. FRIT?

I will not hold my breath waiting for David Cameron. If he says anything it certainly will not be tub thumping stuff- as it should be!

I was astounded to discover, on another blog, the Office of National Statistics Analysis of racist crimes of violence. England and Wales 2005.

White. 75,912
Black. 7,408
Asian 28,634
Jewish. 82
Other. 10,446.

Now, why did I not read this in our National Newspapers or on the BBC? The figures completely demolish what we have been brainwashed into believing.

White people are the oppressed!

Peter From Maidstone

There seems to be something very fishy going on in the MSM since the Neather topic is being studiously ignored.

What do we have to do to get it reported?

Pete Hoskin

strapworld, Peter from Maidstone et al: see my comment above...

Peter From Maidstone

Pete, that's not enough. A mention isn't comment, and it shouldn't need a lot of thought. What is the hesitancy in dealing with this major and serious issue?

Have you been silenced by some legal process?

strapworld

Mr Hoskin,

I noticed your quick reference yesterday. BUT that was after I and others had written about it.

Surely, you can see this report is dynamite for the Conservatives?

Frank P

They are frit, as someone points out above, because they are trying to be all things to all men both from electoral and magazine circulatory angles. Yet if both the pols and the hacks were to understand what's going on just now, if they came out with true Tory colours flying they would piss the election with votes to spare for the next one. Sad fact is that the multi-culti melange has now swamped us; a generation has been irrevocably brainwashed (in some case I suspect brain removal and cotton wool substituted during th primary surgical aim of cojones removal) so it's all too late anyway. We have betrayed the three generations that preceded us. A ghastly dereliction of duty!

General Zod

This is not a thread about racial politics!

What George Osborne stil hasn't understood, any more than Brown or Mervyn King understnad it is that capital flows always take the route with the least obstacles. Attempting to install a Glass-Steagall type division into UK banking will result in the flow of the deals that earn the fees moving outside the UK once the tax losses are used up.

The Glass-Steagall Act's utility passed long before its repeal. The US has made several legislative mistakes over the last century that have benefited the City, the most important being the 1960s Interest Equalization Tax and the 1990s Sarbanes-Oxley Act. It would be absurd if we were now to do the same sort of thing and hobble the City.

Holly ......

Kevin Bodman....
Glenn Beck...'thats our next president'

Holly ......

Sky news HAS been running this.

Naomi Muse

Agree with Tom Tom that it was Clinton who set up the Act

BUT

it was Dubya who needed the votes of the construction workers and the poor of the US to get in a second time.

It was in the run up to the second election (of pregnant chavs fame) that the aspiration was put for all citizens to own their own home and SUV in every driveway.

He got construction working again and got more cars sold, and got voted back in to power for the next 5 years.

He instructed the banks and the FED that bigger mortgages had to be given and overwhelm asset value if necessary etc etc.

A pivotal act in spreading bubble chasing around the world.