Friday, September 24, 2010

The banks are squealing

The publication today of the Commission into Banking's report on the issues they will consider has not come a moment too soon. They have a year to come up with their proposals to reform the banking system. I am looking forward to what they come up with. As a supporter of liberal economics, for capitalism to work properly, competition is needed. When markets are dominated by a small number of giant operators, competition is reduced, service deteriorates and costs to customers go up. Monopoly is bad for markets and needs to be stopped from developing. I covered all this when I worked in the Lib Dem Policy Unit earlier in the last decade when I wrote our policy paper on competition and business.

So, hopefully the Commission will recommend a break up of the big banks, especially the Lloyds Group, the creation of which was a poisonous legacy of the last Labour government.

What we have heard today however is the squealing of the top brass in the banking sector. Stephen Lester, brought in to head Royal Bank of Scotland after its near collapse, calls the inquiry a "red herring". He is of course top cat in a business that is now 83% owned by the taxpayer. His business is therefore a direct beneficiary of the unintended blackmailable situation of being too big to fail. So, I really think he should not be expressing such comments from such a privileged position.
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