Martin Vander Weyer Martin Vander Weyer

Any other business | 10 September 2011

A thunderous collapse could drown out the clamour over banking reform

A thunderous collapse could drown out the clamour over banking reform

The banking lobby doth protest too much, methinks — to misquote Hamlet’s mother — and so doth its enemies, not to mention the opponents of planning reform. In fact, there’s a whole lot of grandstanding going on in the public arena which I fear may suddenly be silenced either by a thunderous collapse of the eurozone or the giant toilet-flush that will signal the onset of renewed global recession.

Or both. And if that sounds unusually gloomy for this column, I refer you to this week’s news that in August the US economy generated no new jobs at all and the UK service sector (including hotels, catering, transport and business services) suffered its sharpest slowdown since the foot-and-mouth crisis in 2001. Combine that data with my own analysis last week of the paralysis threatening the European banking system, and even Mr Happy might feel it’s time to buy gold and batten down the hatches.

Meanwhile, the jousting over banking reform continues ahead of Monday’s release of the final report by Sir John Vickers’ Independent Commission. Its core proposal is that the UK retail operations of banks that are ‘too big to fail’ should be ‘ring-fenced’ — separately and strongly capitalised — so that taxpayers will never again have to bail them out, whatever catastrophes befall the securities trading and related activities that are now routinely referred to by bank-bashers as the ‘casino’ side of the business.

Vince Cable roars like a bull to see ring-fences erected without delay. John Cridland of the CBI responds that it would be ‘barking mad’ to enforce such a costly regime in current conditions; the fund manager Crispin Odey says it would ‘put us back in the Stone Age’.

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