Monday, 18 March 2013

The utter and complete uselessness of the Vickers commission.

Martin Wolf in today’s Financial Times:

“The UK’s Independent Commission on Banking (the “Vickers" commission) of which I was a member made a modest proposal: the proportion of the balance sheets of UK retail banks that has to be funded by equity , instead of debt should be raised to 4%”. (That’s now been watered down to 3% by George Osborne, the UK’s finance minister. No doubt banks have promised generous donations to the Tory Party and to help fund Osborne’s election expenses at the next election in exchange for his “generosity”.)

Martin Wolf continues: “If you think that running banks with so little loss-absorbing equity is crazy, you are right…..It makes no sense to build either bridges or banks sure to collapse in the first big storm.”

So what was the point of the thousands of person-hours and millions of pounds it took to produce the Vickers report? The report might as well have consisted of one sentence. Something like: “Let’s rob the taxpayer with a view to putting the banking industry back where it was before the crunch, and then rob the taxpayer again come the next crisis.”

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