Banking Commission - They bottled it

[usedbustickets]

http://www.bbc.co.uk/news/business-13032403

So the recommendation from the Banking Commission is to reject the formal seperation of the large UK based banks into a retail and investment units.  Instead they recommend that these banks should be allowed to continue as they are on this issue, but they simply 'build a firewall' between these two commercial activities.

Well that's got to be the biggest bottle job since Chamberlain returned from Munich.

Their recommendations do nothing about the 'too big to fail' problem.  In other words you and I, through implied and actual government guarantees, will continue to underwrite all their activities, including those that go under the euphamistic title of investment banking.  Which is better described as the casino economy. Well that is unless they move off shore to a more 'banker friendly' environment.  Yes please say I, but is unlikely to happen as they couldn't find a more compliant and supportive government and regulatory regime than the UK.

Also the proposed firewalls between retail and investment divisions of a bank will not stop them using OUR money for their risky 'casino economy' activities, which is what the Bankers have always wanted from the commission.  To explain this simply, they will be able to continue to borrow money at favourable interest rates from the retail arm of the bank, to use in the speculative world of investment banking.  Rather than borrowing the money from elsewhere at much higher commercial interest rates.  We all continue to pay again for the greedy bankers.

It'll be no suprise to see Osbourne leaping on this later on today as the way forward.  Except he knows, and his banker friends know, that nothing has really changed.  We will continue to pay, and we continue to be at risk of another banking crisis that we - and as importantly the real economy - will end up paying for.

It really is the old bankers addage - Privatise Gains and Socialise Losses[!]

[Colwyn]

But this miserable little pipsqueak of a regulation will still have bankers wailing that they won't be able to afford so much (!) lending to small businesses nor an increase in interests rates for savers (in order to gain the funds to invest in small business).

[Ovacikpeedoff]

What is needed is a global banking regulatory system. What the commission did was to ensure that the big banks were not upset and leave London to go to a more favorably regulated country. Banks like HSBC have been threatening to move to Hong Kong rather than stay in London.This in turn means that the government have to worry about the loss of jobs and tax revenues.

It reminds me of the old episodes of Yes Prime Minister when Sir Humphrey always suggested if you want to hide anything or avoid the truth coming out then set up a commission. A big report that is not binding on the government.