Alistair Darling will today present the Treasury’s ideas on the future of British banking. In a couple of hours, the media will descend to some venue or other to hear what Darling and his team have come up with to get us out of the current mess we’re in.
I don’t quite understand why they insist on an official publication launch when most journalists already appear to know what’s in it. So, why don’t we do a brief overview of the Cassandras and soothsayers’ musings pre-publication…
The Financial Times talks about a tough new system: the new rules would result in banks splitting up to subvert new regulations for risky business, or move abroad to escape this new, ‘tough’ regime completely. The former would not be a too bad idea, seeing as the large size of banks contributed to the problem in the first place. The FT, however, also states the sad sad fact that Darling will not break up the big banks, although there is a clear mandate to do so: if a bank is too big to fail, it is too big
Over at the Guardian, the really rather silly bits of the reforms stand out: the hacks there appear to know that mortgages and pensions have to hold health warnings – similar to those on tobacco and fatty foods. What would that look like?
WARNING: THIS PRODUCT IS INTRANSPARANT AND YOU MAY LOOSE ALL YOUR MONEY.
Hey, that’s going to restore trust in the banking system!
The Telegraph already has a comment out before the paper is there – on how politics is going to foul the reforms. Very true, seeing that it appears all about who wins the next election rather than trying to do something about the mess now, and that the battle lines are drawn up. Not that papers in any way shape or form contribute to party politics.
The BBC quotes the head of the British Banker’s Association, Ms Angela Knight, to be very cautious. Now that seems rather cheeky of someone who represents banks whose primary modus operandi was to throw caution to the wind – and expect the tax payer to pick up the bill. The BBA should really be a bit more careful of what they’re saying, given that their mandate is a bit shaky – what with two of the big four banks being propped up by Government, one of which, along with Northern Rock, is owned by the public. As far as I know, the BBA doesn’t have a representative of the new bank owners (i.e. us) on board. This seems to kind of diminish their legitimacy!
The Independent focuses on the benefits for customers: a NHS-Direct style hotline for people unsure about what financial product to buy. The scandal of overdraft charges needs to be resolved, and they too mention the health warnings on riskier products.
All of these little snippets also mention in one form or the other the fact that banks won’t be forced to split up in to smaller units. Reading through these articles, there is a palatable sense of wonderment – either with a (secret) sigh of relief from the FT, or with puzzlement as to why the reforms appear to be so superficial.
It does seem rather odd that the big issues are left out: why retail banking and investment banking are not split up again; why banks are not cut down to size; why bonuses are not capped – although the Times seems to think that they are..; why, in other words, there is no proper reform of the financial system that has collapsed.
The city is already trying to return to business as usual, and unless Darling keeps a few bomb-shells up his sleeve, then the paper will do little to stop this.
Well, I shall try and speed-read through the paper later and see if the reforms will actually be a proper remedy rather than just a band-aid.