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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