Banks – Business as usual?

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Posted in:Banking and Finance|January 20, 2014 | Join the mailing list

There have been two recent articles in the Financial Times which have suggested that the banks have escaped any significant reform or constraints since the financial crash of 2008. It appears that it is very much business as usual.

Philip Stephens wrote in his article ‘’Nothing can dent the divine right of bankers’’ that there has been a noticeable lack of change to the way banks operate since 2008. While record fines have been imposed by regulators since the financial crash, the banks
have merely shrugged these off and carried on as they were.

The laws and regulations have been tweaked and tinkered with but the basic system remains untouched, something commented upon in the recent review of banking by the Banking Standards’ Commission and the Government’s response to that review. Mr Stephens states
that the banks play on the Government’s fears that any major reform may lead to them choking off credit to businesses and that this would slow, or even stop in its tracks, economic recovery.

Unfortunately the public has become so desensitised to the wrong-doing of banks that any new allegations against them barely cause a stir, as this is now what we have come to expect from the banks.

He therefore suggests that ‘’the reign of the bankers carries on uninterrupted.’’

As if to prove Mr Stephens’ point the article ‘’Mark Carney deals blow to Labour bank review’’ explains how the Governor of the Bank of England, Mark Carney, has stated how he opposes any ‘’crude bonus caps’’ for bankers or any attempt to reduce their market
share in order to foster more competition.  See the cartoon below.

Ed Miliband had suggested that he would ask competition authorities to investigate whether high street banks have abused their dominant positions, a point repeatedly brought up publicly by Berg’s senior partner, Reuben Berg and managing partner Alison Loveday.
Banks in the UK have so far avoided any competition enquiries despite both The 2011 Vickers report and the Parliamentary Commission on Banking Standards recommending measures to increase competition.

Mark Carney’s comments will provide a blow to suggestions that there should be an inquiry into competition in the banking sector and add further weight to the suggestion that there will be no widespread banking reform post 2008.

It seems that the banks will continue to be unburdened by any threat of reform and can proceed pretty much as they were pre-2008.

Telegraph cartoonist Matt sums up the mood nicely in his recent cartoon

Image courtesy of
Telegraph media group.

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