Thursday, Oct 22, 2009

Smaller banks would be good for competition. What about a Glass-Steagall separation?

Telegraph: Is Labour setting us up for the next crisis? King thinks so

Bank of England Governor Mervyn King favours a Glass-Steagall like separation of utility and investment banking. "There are those that claim such proposals are impractical," he said, before adding: "It is hard to see why." The case for a serious review of how the banking industry is structured, he concluded, is strong. Paul Volcker, Mr King, Lord Lawson, John Kay, Terry Smith, Anthony Bolton, and all have now pronounced themselves in favour of Glass-Steagall. It is often said that Glass-Steagall would not have prevented Northern Rock nor would it have stopped Lehman Brothers. I beg to differ. By the time it went under, the Rock could in no way be described as a narrow utility bank.

Posted by drewster @ 12:46 AM (1216 views)
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1. drewster said...

quiet guy,

Following on from our comments earlier, I think different writers mean different things when they talk about Glass-Steagall. In this article the writer describes separating domestic and international arms of banks; because governments should only step in to rescue the domestic part.

Thursday, October 22, 2009 12:53AM Report Comment

2. rumble said...

I'm not sure governments should step in to rescue any. Surely the separation of keep-joe-bloggs-money-safe and derivative-gamblers.

Thursday, October 22, 2009 01:35AM Report Comment

3. rumble said...

Ok, i'm reading threads in reverse. Coming back to this one... The separation would mean that retail banks would not have been able to pass the debt along to the commercial banks, thereby preventing excess credit - yes?

@crunchy: "Browns future employment like Blairs is a done deal."
You sure about that? I was under the impression that Britons aren't the only ones who think he's an idiot.

Thursday, October 22, 2009 01:58AM Report Comment

4. devo said...

"Making apparently limitless quantities of cheap money available to bankers is like giving naughty schoolchildren the keys to the tuck shop – they will inevitably gorge themselves until sick."

Jeremy Warner

Thursday, October 22, 2009 06:26AM Report Comment

5. crunchy said...

3. rumble

Time will reveal. He has lasted this long.

Thursday, October 22, 2009 07:53AM Report Comment

6. crunchy said...

3. rumble

No time to find my original thread , but I also said something about a part time "non job" with a big pay check and something about back

handers legal or otherwise. The idiot factor I feel is not an issue in this matter. True or false.

Thursday, October 22, 2009 08:10AM Report Comment

7. crunchy said...

Here's how it's done. Do those names ring a bell?

Thursday, October 22, 2009 08:42AM Report Comment

8. stillthinking said...

Before we forget, financial services are something like 20% of tax revenue, when they were gambling and won New Labour were able to expand the state considerably. Should they shut down the casino they also shut down government spending.

Thursday, October 22, 2009 09:04AM Report Comment

9. crunchy said...

Tony again, and the strong arm of the FSA.

Thursday, October 22, 2009 09:23AM Report Comment

10. cat and canary said...

stillthinking..."Before we forget, financial services are something like 20% of tax revenue, when they were gambling and won New Labour were able to expand the state considerably. Should they shut down the casino they also shut down government spending."

.. hmm... without the tax revenue of the financial sector we would have overcrowded tube trains, dodgy road surfaces, a slow NHS system and overcrowded trains :) sorry, couldn't resist the temptation for sarcasm! But you're question is very valid.

.. perhaps, just a theory, perhaps without the rot of certain parts of the financial sector (not all of it), UK society would be a fairer and more just place.

We constantly talk about the 'financial trickle down effect.' But we forget to mention the 'screw-thy-neighbour trickle down effect'....

Thursday, October 22, 2009 10:28AM Report Comment

11. rumble said...

"Time will reveal."
Obviously. What else is it going to do?

Speeches? Tony Blair, while a charlatan, isn't known as a pathological liar - what good a speech from a pathological liar?

Thursday, October 22, 2009 12:53PM Report Comment

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