Ben Chu: How far and how fast is key to the reforms

The commission said that high street depositors should be first in line to get their money back if a bank goes bust

Share
Related Topics

There have been numerous new banking rules and financial regulatory frameworks introduced over the past four decades. Each one has been presented by politicians as a way to make banks safer. And yet we have, today, a global banking sector that is riskier and more fragile than ever. We should look to details, not headlines, when evaluating reforms. And the detail of today's response from the Government to Sir John Vickers' commission on banking needs to be especially closely scrutinised.

The Government has already said that it intends to act on the main recommendation and impose a ring-fence around the high street banking arms of our giant banks to prevent them being contaminated by losses incurred in banks' "casino" speculation arms. But how high and wide will that ring-fence be? Will it be a Berlin Wall? Or a Maginot Line?

Vickers also said that UK banks should be forced to hold more capital. The Government has said it intends to implement this too. But will the Chancellor go for the 17 to 20 per cent capital buffer for our largest financial institutions recommended by Vickers, a suggestion that has prompted howls of fury from bankers? Then there is protection for ordinary savers. Vickers said that any high street depositor should be first in line to get their money back if a bank goes bust. The banking lobby complained that this would deter big companies from putting their savings in banks. Will the Chancellor side with the banks or Vickers on this point?

The timing is crucial too. Vickers recommended that safeguards be in place by 2019. But as Robert Jenkins, of the incoming super-regulator, the Financial Policy Committee, has pointed out, this permits seven years of ingenious evasion planning by bankers. If the Chancellor is serious about making the British public safe, he will make it clear that the reforms be implemented without delay.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

SEN Teaching Assistant Runcorn

£50 per day: Randstad Education Cheshire: SEN Teaching Assistant EBD , Septemb...

SEN Teaching Assistant Runcorn

£50 per day: Randstad Education Cheshire: SEN Teaching Assistant EBD , Septemb...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

IT Systems Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

Day In a Page

Read Next
 

Daily catch-up: odd pub names, final polls in Scotland and war historians

John Rentoul
 

i Editor's Letter: We are winning the fight against extreme poverty and hunger. It's time to up the ante

Oliver Duff Oliver Duff
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week