Independent Commission on Banking: Day 4: The message to the Independent Commission on Banking
written by Angela Knight on 25/08/2011
The banking industry is not a lone voice in this debate. Concerns about the possible conclusions of the Independent Commission on Banking have been raised by investors, by fund managers, by commentators, and by analysts – even by authorities outside the UK.
So the very strong messages to the Independent Commission on Banking are these:
1. The final recommendations must be fully costed – not just for the banks at which they are targeted but also for customers and the economy;
2. The final recommendations must show a range of recommendations - with the analysis and underpinning work all presented for scrutiny, with both options and consequences; and
3. The ICB must be brave. As so many of the things which it was set up to achieve have already been done by other means, it must be brave enough to say this and brave enough to put to one side proposals which are now not relevant as other steps have been taken.
As the disruption of the markets this summer has shown, the sovereign debt crisis has not yet been resolved. Bluntly, some governments spent far too much in the good times on the assumption that someone else would pay - and they would get re-elected. The UK was one such country, but it has convinced global investors and governments that it is getting a grip. This has not happened convincingly elsewhere. The failure of the eurozone to sort out its problems efficiently and promptly is holding back its growth. This will also impact on the UK as the eurozone is one of our major markets. And the fact that the US remains in difficulty, as it too did not take the difficult economic decisions early enough, adds to the problem of economic recovery here in the UK.
From now on the UK’s efforts must be focused on economic recovery. This means allowing the banks to finance the recovery first, pay back the tax payer next, and only then turn to further regulatory change. If more regulation remains at the top of the list then this will only have the effect of risking the recovery which is so essential to our future.