Lib Dem shadow chancellor Vince Cable has been delivering a speech on reform of banking regulation to the London Stock Exchange, outlining the ways in which the current regulatory model could be improved. Here’s the skinny:
- RBS and Lloyds to be broken up before they are returned to private ownership
- Highly paid bankers to publish details of their remuneration and confirm they are resident and domiciled in the UK
- The FSA to remain as a unitary regulator
- A long-term role for state banking, rather than the quick sale of state-owned banks
- The scrapping of the “woefully misconceived” Asset Protection Scheme
And here’s Vince’s customarily pithy sound-bite:
The Government has yet to grapple with the challenge posed by the Governor of the Bank of England: that if a bank is too big to fail it is too big. One approach is to make it easier for big institutions to fail.
“Some aspects of the financial services industry are simply too big for the British economy to manage safely. The large, failed, British banks are the financial equivalent of Chernobyl. Like the former Soviet Union, the UK became over reliant on dangerous financial reactors.
“Britain has the highest share of banking assets in GDP of any major country, four times as high as the US. To prevent Britain from becoming the next Iceland, radical safety measures, like ones I have set out, are required.
“My approach to the City is not one of hostility, or of obsequiousness. I recognise its importance. But it needs ‘tough love’, not the freedom to run amok.”
But for those who want to read Vince’s words of wisdom in greater detail, excerpts from the speech transcript follow: