ID :
174794
Tue, 04/12/2011 - 10:04
Auther :
Shortlink :
https://www.oananews.org//node/174794
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Separating retail, investment banking 'not necessary,': UK commission
London, April 12, IRNA – The British commission, set up to prevent a repeat of the 2008 banking crisis, Monday recommended ring-fencing retail banking from risky investment operations but stopped short of supporting a complete separation of the two entities.
Releasing an interim report, chairman of the Independent Commission on Banking Sir John Vickers, argued that a 'total separation of retail and investment banking is “not necessary'.
'UK retail banking can be protected by its own capital cushion. Other parts of the bank should be allowed to fail' in the event of another crisis, said Vickers, a professor of political economy and a former chief economist at the Bank of England.
In an interview with the BBC, he accepted that it would lead to additional costs to the banks and some would fall on the wider economy, bur insisted that the cost would be greater to investment banking than retail business.
Britain's coalition government, which has faced extensive public criticism for failing to stand-up to the way banks operate, including the failure to tackle excessive bonuses, set up the commission last June to reduce the risk of future bailouts paid by taxpayers.
'I welcome the excellent analysis in this interim report and look forward to receiving their final report later this year,' Chancellor of the Exchequer George Osborne said in his initial response.
Last month, London saw the biggest protest march since the height of opposition to the 2003 Iraq war, against the government’s programme of public service cuts, saying that taxpayers should not have to pay for the financial crises caused by the banks.
The commission suggested that 'firewalls' can somehow be set up within giant universal banks, to ring-fence customer's money from risky investment banking operations blamed for the financial crisis.
The interim report came as former prime minister Gordon Brown admitted he made a 'big mistake' over the handling of financial regulation in the run-up to the UK's banking crisis of 2008.
'We set up the FSA (Financial Services Authority) believing the problem would come from the failure of an individual institution.
That was the big mistake. We didn't understand just how entangled things were,' Brown told a US conference./end
Releasing an interim report, chairman of the Independent Commission on Banking Sir John Vickers, argued that a 'total separation of retail and investment banking is “not necessary'.
'UK retail banking can be protected by its own capital cushion. Other parts of the bank should be allowed to fail' in the event of another crisis, said Vickers, a professor of political economy and a former chief economist at the Bank of England.
In an interview with the BBC, he accepted that it would lead to additional costs to the banks and some would fall on the wider economy, bur insisted that the cost would be greater to investment banking than retail business.
Britain's coalition government, which has faced extensive public criticism for failing to stand-up to the way banks operate, including the failure to tackle excessive bonuses, set up the commission last June to reduce the risk of future bailouts paid by taxpayers.
'I welcome the excellent analysis in this interim report and look forward to receiving their final report later this year,' Chancellor of the Exchequer George Osborne said in his initial response.
Last month, London saw the biggest protest march since the height of opposition to the 2003 Iraq war, against the government’s programme of public service cuts, saying that taxpayers should not have to pay for the financial crises caused by the banks.
The commission suggested that 'firewalls' can somehow be set up within giant universal banks, to ring-fence customer's money from risky investment banking operations blamed for the financial crisis.
The interim report came as former prime minister Gordon Brown admitted he made a 'big mistake' over the handling of financial regulation in the run-up to the UK's banking crisis of 2008.
'We set up the FSA (Financial Services Authority) believing the problem would come from the failure of an individual institution.
That was the big mistake. We didn't understand just how entangled things were,' Brown told a US conference./end
