David Prosser: Why we must snuff out the bankers' attempts to prevaricate on reform

Outlook: The British Bankers Association intends to campaign for a delay in implementing of Sir John Vickers' proposals, whatever they might be

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There is no excuse for failing to see it coming. Britain's biggest banks have spent the whole summer ratcheting up the rhetoric ahead of the publication next month of the final report of the Independent Commission on Banking, dropping ever-less-subtle hints about the dark days to come should Sir John Vickers' inquiry dare to be too bold. Now Angela Knight, the banks' cheerleader-in-chief, has come right out and said it: as The Independent revealed yesterday, Ms Knight intends to campaign for a delay in the implementation of whatever reforms Sir John proposes. The chief executive of the British Bankers' Association argues that the nation's economy is not strong enough to withstand a shake-up of the sector that might make it even tougher for our brave banks to fuel the recovery with much-needed credit.

Let us not be entirely cynical. While the banks' shrill warnings about the implications of the ICB's proposals reflect self-interest – the volume rose as it began to sink in that Sir John would not be the patsy for which bankers had prayed – there is some logic in what Ms Knight is saying. In fact, her argument mirrors the counter-cyclical approach our financial regulators are now supposed to take.

Andrew Haldane, the Bank of England's executive director for financial stability – and a member of the new Financial Policy Committee charged with looking at the big picture – made headlines with a speech this month on that issue. In tough times, the FPC's job would be to take the pressure off, Mr Haldane explained, just as it would be to bear down on excess when parts of the economy were racing ahead.

Might that mean less exacting capital standards for the banks at moments of stress – in order to enable them to keep the flow of credit going, for example? Well that is possible. Mr Haldane pointed out that this was exactly how President Roosevelt sought to handle the US economic crisis of the 1930s – and the strategy worked.

So should we yield to Ms Knight's demand for a delay to banking reform? No, for several reasons. The most important of these is that the new world of counter-cyclical regulation is appropriate only when the problems of the old have been fixed. There will be a time when regulators feel confident enough to offer banks some respite in the face of a crunch, but only once they have reached a baseline of security. That is what the Vickers reforms, alongside the reforms proposed in Basel and elsewhere, are designed to do.

To put that another way, you wouldn't worry too much about saving a few quid on roof maintenance when your household finances were under pressure – as long as you were confident all the holes that leaked during previous downpours had been plugged.

Consider, too, the nature of the threats to come over the next year or two. There is the generalised slowdown in the rate of economic recovery, particularly in the West, the effects of which the banking sector cannot escape. There is also the very specific problem of the eurozone's sovereign debt crisis, where the banks are absolutely in the front line.

The third reason not to delay banking reform is that Sir John's proposals address competition as well as financial stability. We have already waited too long for measures that will begin to break the big banks' stranglehold on their industry – and implementing such reforms may help widen the availability of credit.

This is a dangerous moment. Despite their protestations to the contrary, there have long beensuspicions that some Conservative members of the coalition Government are less minded to be tough on the banks than they claim publicly (those suspicions are held, not least, by their Lib Dem partners).

It is possible, then, that the Government might be receptive to the case made by Ms Knight and the banks. The slowing in the pace of economic recovery so noticeable over the summer just might be the excuse ministers have needed to ease off the banks. If so, it would be a serious mistake.

The wrong moment to change media laws

It is no surprise that the Labour Party is trying to extract further political capital from the phone hacking affair. But its calls for immediate changes to the law on media ownership, for which no Parliamentary vote would be required should cross-party agreement be secured, represent exactly the sort of knee-jerk response to events that the party's leader so decried following the riots.

What apparently concerns Labour is the idea that Rupert Murdoch's News Corp could, in theory, return to the bidding for full control of BSkyB once six months have elapsed from its announcement in mid-July that it was walking away from the deal. Lord Leveson's inquiry into the media may not have finished by mid-January, and there certainly will not have been time to have passed legislation based on its findings. Labour therefore argues that an emergency response to the Murdoch threat is needed.

The game, of course, is to box David Cameron into a corner where his Government appears to be defending the Murdochs' right to return to the Sky fray. In practice, however, it is inconceivable that News Corp will come back as soon as the deadline, dictated by takeover rules, has passed.

More importantly, writing law in this way, to address a single theoretical turn of events, almost always turns out to be misguided. And in any case, if the Murdochs were somehow to recover so quickly that they made another Sky bid before a review of media ownership laws was completed in light of Leveson, the current rules provide remedies for dealing with it – including the "fit and proper person" test about which Labour is now making so much noise.

Ivan Lewis, Labour's lead on this matter, says he wants to see politicians taken out of the decision-making process on media ownership. That instinct is the right one – more's the pity then that this policy proposal is so nakedly political.