Samuel Brittan joins the calls for real bank reform
The TUC said that the Vickers Commission on banking reform had been asked the wrong question. Its remit was to make the banks safe, but it needed to go wider than that and set out how to make them useful.
In our view part of the answer should be establishing new sources of credit for businesses through new institutions and a properly resourced green investment bank.
Britain’s political establishment seem to be embarassed about the state ownership of large parts of the banks that needed to be rescued. The ambition is to privatise them as soon as possible and in the meantime they have been given no instructions by government other than get ready for sell-off and carry on as usual.
But the TUC is not alone in calling for much more radical reform. Samuel Brittan in the FT today (£) develops Adam Posen’s call for the Bank of England to restart QE in a way that boosts the real economy. The headline says it all: “Use the UK’s state bank holdings to speed a recovery.”
And he concludes:
Whether any of this would be necessary in a world with an adult attitude to budget deficits is far from certain. But in the world as it is, it is surely far better than doing nothing or leaving everything to the Bank of England. It is time to remember that banks exist to serve the public and not vice versa.”