We have to admit how much more sophisticated the British are about managing their financial sector… but then they have had so many more hundreds of years to do it… they did have a fully blown banking system as we fought them to become independent… 1660’s anyone?
Listen to Andy Haldane of the Bank of England on scaling back the role of banks…
Some opinion from the London Times…
~~~”Well done, Andy Haldane. The Bank of England’s financial stability chief said in a BBC interview [embedded above] that losing a few banks and bankers to overseas jurisdictions “might be a price worth paying” to protect the wider financial system.
His remarks drew the usual broadside from some in the City, who criticised Mr Haldane for damaging the Square Mile — anonymously, of course.
The sense of entitlement of some of our most senior bankers is matched only by their reluctance to defend their industry in public. Mr Haldane is right.
Iceland was brought down by its bankers. Britain came dangerously close.
This country’s banking sector has simply grown too big for the taxpayer base that is still obliged to underwrite it.
Banks have grown so large not because they are providing a good service to the world but for precisely the opposite reason. They earn abnormal profits and pay out abnormal bonuses not by helping their clients, but by fleecing them.
The usual discipline of market forces does not work in this world because it is controlled not by the clients but by their agents.
A financial plumbing system that should be as small as possible, simply channelling money from savers to borrowers as cheaply and unobtrusively as possible, has instead transformed and furred up into a vast, Byzantine system of gold-plated pipes and valves of ludicrous complexity.
Most of the so-called financial innovation claimed by the banks is designed not to give a better or cheaper service to clients but simply to bamboozle them more effectively.
As Paul Volcker put it the other day, the greatest piece of financial innovation of the past few decades has not been the credit default swap or any of the other fancy derivatives conjured up by the industry’s energetic rocket scientists, but the humble cash machine.
The former US Federal Reserve Chairman argued that the mushrooming in the relative size of the financial services industry in recent decades was not because it was creating extra value for the world but simply because it was paying itself much, much more.
His grumpy denunciation of modern-day wholesale financial services at a Wall Street Journal conference the other day was magisterial.
Cue hundreds of bankers shuffling their feet in embarrassed silence.
Lord Turner of Ecchinswell, the chairman of the Financial Services Authority, was spot-on when he argued that some of what the City does is socially useless.
In some ways, it is worse than useless, depriving other industries of our brightest and most energetic graduates.
The banks are perhaps the victims of their particular activity. They deal in that most commoditised of products, money. A loan is a loan is a loan. Beyond a few bells and whistles, there is no honest way to dress it up to make it better.
So some banks have strayed into dishonest ways instead.”~~~