The City for its part seems to have misinterpreted what Labour is proposing. Bank shares took a pounding and TSB's chairman, Sir Nicholas Goodison, furiously attacked the idea of a windfall profits tax despite the fact that Labour is not proposing any such thing.
As we report on page 1, Alistair Darling comes as close as a politician ever can to ruling out a windfall tax of the kind introduced by the Conservatives in 1981. He recognises that banks are not the super-profitable creatures of popular myth.
Measured by average return on capital over the entire economic cycle they probably achieve something like a 12 per cent return. Industries such as pharmaceuticals, household products, retailing, food manufacturing and printing have all managed better than that.
Instead, Darling wants to create a banking regulator to sit alongside the Bank of England and look after consumer interests. But the regulator would not have the same powers as the regulators that police the privatised utilities. He or she wouldn't forcebanks to lend against their will or cap their interest rates, but would make banks communicate better with their customers and force them to publish their charges.
Beyond that, things are still a bit vague. It's not clear how the new "Ofbank" would work in conjunction with the Bank of England, which already supervises the banks. But from what we know, there's no reason why it should strike terror into the average clearing banker.
Really getting the banks to offer a better deal and service to personal customers and small firms will happen only when banking culture changes from within. And that will only happen as customers get more used to voting with their feet. Inertia has been the clearing bankers' best friend.Reuse content