+++ 6. Juli 2012 +++
The Financial Times Now Calls for "Formal Glass-Steagall-Style" Restructuring
The disastrous developments in the trans-Atlantic financial system over the past couple of weeks, combined with the revelations over manipulation of the Libor rates, have provoked a huge debate on banking reorganization in the United Kingdom, including in the heart of the international financial system – the City of London.
In a rather extraordinary editorial on July 4, the Financial Times writes that measures for restoring trust include separating the investment and retail parts of universal banks, and argues for a Glass-Steagall-style approach, as opposed to the ring-fencing approach of the Vickers Commission. How much of the FT's proposal is genuine, and how much is an atttempt to co-opt the fast-growing support for a complete separation between traditional banks and trading/speculative operations, remains to be seen. The editorial is nonetheless worth quoting:
"The clash between retail and investment banking has always been evident. What is now clear, however, is that the hard-charging, revenue-seeking investment banking culture predominates when they are pushed together. The more herbivorous retail banking ethos - with its emphasis on patient stewardship - is marginalised. This seems to lead ineluctably to the proliferation of socially questionable trading activities and abuses such as the Libor scandal.
"The government accepted the principle of separation last year when it endorsed the conclusions of the banking commission presided over by Sir John Vickers. This argued for an internal split rather than a total separation on the basis that the diversity of assets within a universal bank could be a source of strength at times of financial stress.
"While the FT supported those conclusions, we are now ready to go further. For all the diversification benefits, the cultural tensions between investment and retail banking can only be resolved by totally separating the two, on formal Glass-Steagall-style lines."
The Libor scandal also prompted Liam Halligan of the Telegraph to call once again for Glass-Steagall, in the July 1 Sunday edition. Commenting on the bailout scheme for the Eurozone, he noted: "The circle will only be broken, of course, once politically-connected banks are busted up and their creditors forced to take losses. This has yet to happen in Western Europe - and, until it does, we'll keep lurching from crisis to crisis.''
Halligan points to the major criminal investigation now underway in the City of London over accusations that British banks were manipulating the LIBOR rates, on which global interest rates are set, And he concludes that, as bad as the banking crisis is on the continent, the crisis in the UK is far worse. In hi view "ring fencing" is folly. "History shows that firewalls don't work, which is why we desperately need a proper 'Glass-Steagall' split. Unless we get one, then the ongoing use of ordinary deposits to finance investment bankers' bets will result in yet more UK bank bail-outs. Given the rescues we've seen so far, and the gargantuan size of our bloated banking sector, this is something the UK simply can't afford."
~ deutsch + english ~
+++ 7. Mai 2013 +++
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+++ 7. Mai 2013 +++
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+++ 7. Mai 2013 +++
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