February 1st, 2013
The pusillanimity of the new capital reserve requirements was accompanied by almost unbelievable procrastination.
It was decided that the new rules would not apply till 2019, as though the risk of a fresh crash could attend upon the convenience of the bankers. As if this was not bad enough, Osborne, desperate to get the banks lending to industry to re-start growth, conceded to the banks that the ratio would be reduced from 4% to 3%, thus reopening the very real risk of another disastrous run on a weak bank.
The banks, true to form, responded to this inordinate and dangerous concession by increasing their lending to industry virtually not at all.
To cap it all, the capital adequacy ratio isn’t anyway fit for purpose by itself since under the Basel reform proposals it wasn’t combined with a leverage ratio which (unlike capital adequacy formulae) really would predict the probability that a bank would fail.
Last month the rules were weakened further. The so-called liquidity coverage ratio – the second arm of the Basel III reforms requiring banks to hold enough cash and easy-to-sell assets to enable them to survive a short-term crisis – was softened by allowing them to hold a wider (and easier) variety of liquid assets towards their buffers and also by changing the calculation methods in ways that significantly reduce the liquidity buffers that have to held.
Now even the ring-fencing itself between the retail and investment arms of banks, as proposed by the Tory-commissioned Vickers report, is being seriously threatened. This UK report, which is still be implemented nearly 6 years after the crash, was reinforced by very similar recommendations of the EU Liikanen report last October.
However, it’s not as though ring-fencing is anyway an adequate solution. Ring-fences (as opposed to a clean statutory break) are just too porous that can end up more like a string vest, a loophole which can easily be turned by City tricksters into a bolt-hole. Nevertheless that still hasn’t stopped the bankers demanding that ring-fencing is a step too far and should be quietly abandoned.
Are the regulators and politicians utterly spineless?
3 thoughts on “Bank regulation to prevent another crash recedes into the distance”
no they jail the poor for claiming a mare 500 but then if you are a bankers you aloud billions and then not even jailed for it still allowed to carry on getting big bonuses and still up to no good yep are they all in it together jeff3
Benefit claimants, disabled people who have saved money but have not declared it are being hunted down by the attack dogs at Jobcentre plus these people are no better than debt collectors “pure scum” they make their living from raping the claimants of their hard saved savings with the help of HMRC and UK Banks by data matching bank account data with benefit data. This group of claimants/victims are an easy target as they cannot cry out about this calculated and cynical attack by the DWP, JCP, HMRC, masterminded by George Osborne to pillage their savings, and take away their benefits as an extra sadistic twist of punishment.
These people are branded as criminals by the media and Government.
Did we really think these Greedy Bastards would learn from their mistakes?
Government with it’s Candy Floss restrictions & legislation wont stop these Amoral Shits continuing, business as usual!