Now this is totally predictable to regular readers of ValueWalk – and predicted.
The Labor Party which stands to win the next election is taking a stand on banks.
Obviously the preliminary results are in on ”White Paper: Banking Reform.”
In terms that will incense the investment banking industry, Miliband says a Labor government, as one of its first acts, would push through a modern-day equivalent of the 1933 Glass-Steagall Act, which split the commercial and investment operations of US banks after the 1929 stock market crash.
Echoing concerns expressed last month by Sir Mervyn King, governor of the Bank of England, who believes that reforms proposed last year by Sir John Vickers are being “watered down” after lobbying by the banks, Miliband said it was time to stop backsliding and change banking culture for good. The recent Libor scandal involving the fiddling of inter-bank interest rates and the £10bn scandal over mis-selling of payment protection insurance showed the culture was still rotten.
Miliband said: “Either they can do it themselves – which frankly is not what has happened over the past year – or the next Labour government will, by law, break up retail and investment banks.
This is forcing the hand of the government which has been wishy-washy-ing around in the normal way bankers do when caught with their mitts in the public till. The indication of what was in store came when we saw the September 6th 2012 response date for the “White Paper: Banking Reform”.
The conservative government’s approach has been to if not nothing – then as little as absolutely possible.
The real problem with that policy is that it will not be accepted by the European Union. Britain could then secede from the Union. Possibly; but that won’t help! I is hardly a coincidence that the LIBOR scandal has hit the British in headlines – and gut.
We should cast our jaded eye towards Germany from where much of the information about the regular irregular bank practices originates from. I still recall the meeting, where Cameron stormed out incensed – leaving Sarkozy and Merkel standing with Danish Prime Minister Helle Thorning-Schmidt – and Sarkozy telling her to butt out.
Apparently Merkozy were debating what to do next – the answer came unusually promptly with the LIBOR scandal. Now such a response does not come if there isn’t plenty more unpleasantness in store. One only wonders what the next EU move in light of British government tardiness and thinking they can ride out the banking storm.
It is almost certain, that there is sufficient nasty to cater for a prolonged and determined offensive – from the EU. Apparently Miliband has received inside information!
Just listen to Miliband:
“It is incredibly important to show that we ‘get it’ on spending. We are very serious about understanding that the next Labour government is going to face difficult economic times.”
But fiscal discipline had to be balanced with an appreciation that borrowing was rising faster because the government had cut too deep and fast. “If you don’t have a growing economy, businesses aren’t paying taxes, people are claiming benefits and it is not working. So it is a two-pronged approach.”
This could be a verbatim quote of Merkel or even Hollande – which it probably is!
This means severe dissatisfaction in the EU with British progress in the matter. If the Tories won’t do the “right” thing – others will, and they will have all the ammunition they need – unkindly provided by anonymous letters carrying German postmarks.