An Alternative Report on UK Banking Reform
Workaround: In current version of Panels 3.8, it seems this body field needs to be populated in order for title above to appear. This note is hidden by custom CSS style. Jack Latimer.
Experts propose and the public mood supports banking reforms more radical thanthose proposed by the Labour government and the Conservative opposition. This report explains this gap:
- The key political obstacles to reform stem from the influence of the distributive coalition in and around the City of London which has co-opted the political leadership of both major parties.
- The 'distributive coalition' pursues regulatory closure and narrows policy choice by constructing a narrative about the social value of finance which ignores the costs of bail out and exaggerates job creation.
The report then presents a radical analysis of what went wrong in banking before the financial crisis and identifies:
- The problem of "banking for itself" as retail and wholesale banking fused into a giant 'transaction generating machine' which benefited senior wholesale bankers in a kind of joint venture with shareholders.
- How the pre-2007 result was the wrong kind of credit and debt which inflated asset prices unsustainably rather than generated any increase of resources from debt could be repaid.
It ends by proposing more democratic control of finance:
- Reverse the policy bias towards finance by engineering a smaller, safer wholesale sector and installing a new kind of retail regulator to curb"selling to" households.
- Add a vision of what a different kind of finance could and should do to address fundamental issues about how to create jobs in a low carbon economy and how to support retirement for all.