Anthony Hilton: We're stifling banks but no one in charge will be seen being easy on them

 

The economy had experienced a heart attack, Business Secretary Vince Cable told an audience at an event on Wednesday organised by the think tank Politeia. Recuperation is slow, uncertain and takes a very long time, so you should not expect at this relatively early stage that we would be sprinting down the track like Jessica Ennis.

But there are hopeful signs in that unemployment is much lower than feared, and, though it is less widely appreciated, we have avoided some of the big mistakes of earlier crises. In sharp contrast to the 1930s, for example, the nations of the world have not resorted to protectionism and competitive devaluations, with the result that world trade continues to grow and can play a large part in stimulating global recovery.

Not so fast, said one of the audience. While it is true that there were no new tariff barriers or attempts to stifle the flows of physical goods, there had been a huge surge of protectionism in finance, much of it driven by regulators and encouraged by governments.

The whole cross-border nature of global finance was under attack with regulators demanding that banks be separately capitalised in each country where they operate, and a string of regulations which were national rather than international in their impact.

Cross-border lending had plunged and, from being global a few years ago, finance was becoming increasingly balkanised. This made it more costly, less efficient and less able to serve the needs of the global economy and would, in his view, have huge consequences in the medium term for global growth and recovery from the current stagnation.

The obvious riposte, from others in the audience rather than the business secretary, was that the banks had brought this on themselves and politicians were merely taking steps to try to stop something similar happening again.

The point is valid nevertheless. You could stop serious road accidents by imposing a 5mph speed limit on the nation's roads, but the costs would outweigh the benefits. There is a severe risk that we are trying to do the equivalent in banking and fail to realise that we will pay a high price for excessive safety.

It is tempting to dismiss all complaints by bankers as self serving, but this is too important for that and there are signs that regulators round the world are beginning to feel a bit uneasy about piling too much on too fast.

Some say privately that they would like to be significantly less stringent but their difficulty is that they have so little wriggle room. Banks remain so unpopular that no politician or public official wants to be accused of doing them favours.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Administrator

£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

Recruitment Genius: Dialler Administrator

£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

Ashdown Group: Contracts Manager - City of London

£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

Guru Careers: Tax Manager / Accountant

£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

Day In a Page

Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen
Secrets of comedy couples: What's it like when both you and your partner are stand-ups?

Secrets of comedy couples

What's it like when both you and your partner are stand-ups?
Satya Nadella: As Windows 10 is launched can he return Microsoft to its former glory?

Satya Nadella: The man to clean up for Windows?

While Microsoft's founders spend their billions, the once-invincible tech company's new boss is trying to save it
The best swimwear for men: From trunks to shorts, make a splash this summer

The best swimwear for men

From trunks to shorts, make a splash this summer
Mark Hix recipes: Our chef tries his hand at a spot of summer foraging

Mark Hix goes summer foraging

 A dinner party doesn't have to mean a trip to the supermarket
Ashes 2015: With an audacious flourish, home hero Ian Bell ends all debate

With an audacious flourish, the home hero ends all debate

Ian Bell advances to Trent Bridge next week almost as undroppable as Alastair Cook and Joe Root, a cornerstone of England's new thinking, says Kevin Garside
Aaron Ramsey interview: Wales midfielder determined to be centre of attention for Arsenal this season

Aaron Ramsey interview

Wales midfielder determined to be centre of attention for Arsenal this season
Community Shield: Arsene Wenger needs to strike first blow in rivalry with Jose Mourinho

Community Shield gives Wenger chance to strike first blow in rivalry with Mourinho

As long as the Arsenal manager's run of games without a win over his Chelsea counterpart continues it will continue to dominate the narrative around the two men
The unlikely rise of AFC Bournemouth - and what it says about English life

Unlikely rise of AFC Bournemouth

Bournemouth’s elevation to football’s top tier is one of the most improbable of recent times. But it’s illustrative of deeper and wider changes in English life
A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

A Very British Coup, part two

New novel in pipeline as Jeremy Corbyn's rise inspires sequel
Philae lander data show comets could have brought 'building blocks of life' to Earth

Philae lander data show comets could have brought 'building blocks of life' to Earth

Icy dust layer holds organic compounds similar to those found in living organisms