When share prices in Barclays Bank and Royal Bank of Scotland rose by over 3% last week, the markets made it clear that the Banking Commission’s interim report into the 2008 financial meltdown is, in fact, a paper tiger.
Simon Carter
Workers suffering the effects of cuts in jobs and services will be extremely disappointed by the lack of regulation of the banks, like Barclays, who pay little in taxes.
The commission’s chair, Sir John Vickers, attempted to assuage a sceptical public by saying: “In no sense at all are these half measures … these are absolutely far-reaching reforms.”
Instead of the bottomless bailouts of billions of pounds in public funds to the bust banks, the commission meekly suggested that banks hold more cash in reserve. The report recommended holding 10% – as opposed to 7% as set out in new European regulations – but contradicted this by saying it wasn’t proposing that UK investment banks should hold higher capital ratios than their international rivals.
Holding more reserves will mean less profits and banks will inevitably seek to recoup any losses through higher charges to customers on loans, overdrafts and mortgages.
Even the mild reform of separating the retail and investment arms of the banks was kicked into touch with Vickers telling the BBC that “total separation is not necessary”.
Like previous inquiries into bankers’ bonuses and financial chicanery it’s clear that the establishment is not going to bite the hand that feeds it.
The Tory Party is inextricably linked to finance capital and its interests, receiving over 50% of its funding from the City last year.
‘Being rewarded for failure’ appears to be the bankers’ leitmotif and, as usual, it’s the ordinary punters who are picking up the tab through huge job losses, massive cuts in services and declining living standards.
Instead of bailouts, a workers’ government would nationalise, under democratic control and management, the big banks etc, as part of a plan of production, to guarantee cheap loans and credit to the public and small businesses.
