The Sketch: No boom, big bust, in Chancellor <i>vs</i> the banks

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The Independent Online

Let's try to think of mismatched contests. Victoria Beckham challenges Susan Boyle to a dress-off? It's too equal.

Manchester City Reserves play Patrick Moore? But Moore can kick and run a bit. Mike Tyson goes six rounds with the Queen? No, she's a scrapper, comparatively. The USA declares nuclear war on Ruislip? Now we're getting there.

Five million megatons landing on the Ickenham Road, followed by half a million storm troopers in radiation suits. That is the scale of the mismatch when Alistair Darling takes on the banks.

They raped the global economic system, collapsed under their own contradictions and – while politicians denounced "rewards for failure" – hoovered up trillions of taxpayers' money. They took bonuses for going bust, bonuses for getting bailed out, and bonuses for getting out of bed. They can do what they want because the Government agrees that they are "too big to fail". They are beyond the laws of God, man and gravity.

And they are beyond question. Are they public or private? Utilities or casinos? Should they be bankers in bowler hats, or manic credit dispensers? Should they be building their balance sheets or funding the next boom? The political answer to all these questions is Yes.

Darling came to make a statement to the House. He told us he was going to abolish boom and bust (he called it "leaning against the credit cycle") by setting up a Council for Financial Stability. A What for Whatting What?

The poor fellow has no idea of the scale of his insignificance. He says his feckless, inexperienced, undergunned Financial Services Authority "has the power to penalise banks if their pay policies create unnecessary risk". The levels of fatuous unreality in that proposition defy analysis.

He's going to use "systematic stress testing to manage risks in the system". He is going to consider what "counter-cyclical measures are needed". There is going to be "greater parliamentary scrutiny". He is going to make "credit derivatives more transparent". He will put his ankles behind his head and dance a tango on his hands.

George Osborne may not have been particularly constructive but he wasn't ridiculous. He says he'll abolish the "tri-partite system" and maybe he will. The three sides of the system failed to prevent the bust. They didn't "call time" (another fatuous phrase). Nobody will. Who would? Many big financial institutions were warning the bubble was about to burst and nobody took a blind bit of notice.

David Heathcoat-Amory said a tripartite system was relatively efficient compared with the six-sided system the EU was setting up. Peter Lilley had predicted the uselessness of a tripartite system in 1997; he was very modest about it. Peter Tapsell predicted it all as well; he wasn't quite so modest, perhaps. Maybe putting much more responsibility back in the hands of a single entity will work as well as anything else.

Because in the end, banking isn't about regulation, it's about character. Obviously we're in trouble.