Bank regulation 8 years on, why has next to nothing been done?

The real root problem with regulating the banks is that the politicians are hand in glove with them.   The Tories don’t even want to regulate the finance sector so long as it provides them with half their annual income year after year, not just the banks themselves, but the hedge fund billionaires as well.   Worse still, no attempt whatever has been made to deal with the fundamental point of corruption – that whatever the big 5 banks do, they will be protected by the ‘implicit guarantee’ that the government will save them from themselves and bail them out because they’re ‘too big to fail’, too valuable an asset to lose, too crucial a part of running the State, etc.   Risk-taking at a bank that will always be saved is like playing Russian roulette, but with someone else’s head.

The problem is not what the State does, but that its hand is forced.   Knowing that governments must bail out banks means parts of finance have become a one-way bet.   The IMF recently estimated that the world’s largest banks benefited from implicit government subsidies worth a total of $630bn in one year alone, 2011-12.   This perversely makes debt cheap, and promotes  leverage.   In America meanwhile there are proposals for the government to act as a backstop fir the mortgage market, covering 90% of losses in a crisis.   Again this pins risk on the public purse – it’s the same old pattern, socialise the losses and privatise the gains

Removing the subsidies banks enjoy will not only mean that debt becomes more expensive, so that equity holders will lose out on dividends and the cost of credit could rise.   Much more importantly it means seriously tackling the need for the re-introduction of ‘moral hazard’, i.e the awareness that there will in future be no guarantee of State bailing-out or reimbursement for reckless or incompetent lending.  It is inconceivable that that this will happen when the political establishment is so so deeply enmeshed in the finance sector.   The evidence for that is the bail-out to the tune of £68bn, the failure to take any effective regulatory action against the banks for the last 8 years, the postponement of raised capital buffers under Basel III till 2019, the ditching of Martin Wheatley the attack-dog chief of the FCA after heavy bank lobbying, and now the imposition of the deadline of 2018 for any further claims for the 10m customers who were illegally mis-sold payment production claims they neither wanted or needed.

This will only change when that cosy, collusive, symbiotic relationship between State and finance is peeled away, made transparent, and transformed into a proper arm’s length working partnership.  That requires a fundamental shift in the power structure, and the rise of Corbyn is the best hope in the last 50 years that this might be achieved.

6 thoughts on “Bank regulation 8 years on, why has next to nothing been done?

  1. Correct but untill they held to account then on the great swindle will go but if a bank failed without the peasants help then it would be the rich that suffered not poor peasants jeff3

  2. Nothing has changed. I know of Lenders giving 100% mortgages. Nothing had been learnt. I guarantee you, when Banks need bailing out again, the Govt will but they won’t save British Steel.

  3. In the news they hold back cancer patient not to make it look not to good for tory propaganda machine yet I met one such person who had a tumour on his lung yet they dilled they dallied and now he has one on each lung yes another one doomed by their gross neglect of the nhs and whot people are they bribing the doctors to not send you sounds very similar to that aktion t4 plan but on it goes and whilst taking to him his pension lost by fords who sold their plant to one of their so called companies which were still part of their long reach yep hes getting no pension has this company who took over went bust sounds familiar let the peasants eat cake jeff3

  4. This can only bee described as corruption on a global scale and the Tories love it.

    Gone on for centuries nothing will change whilst the banks are funding the Tory coffers.

    It’s a disgrace and we all have to suffer in silence many impoverished as a result.

  5. We do know all this Mr Meacher: we’ve known all this for a long time now.
    What we need to know is, what – if anything – can be done about?
    We can’t pin everyone’s hopes, dreams and everything else on one man, Corbyn and hope for the best!
    Nothing will begin to happen until we have a ‘homogeneous’, focused, finely tuned, fighting fit Political (Labour) Party that represents the best interests of the ‘majority’ of working people: not forgetting the sick, the disabled and the elderly.
    We ain’t got that: big sort out out needed. For a starters all the right wing New (Tory) Labour people need to go and seek more appropriate employment elsewhere: like in the Tory Party. Then maybe everyone in the Labour Party would be facing in the same direction. That would be a good start, I think!

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