Banking Commission: Yet again, the City is under attack
The recommendation in today's Banking Commission report that reckless bankers should face jail sentences in future was designed to grab the headlines. How this will enhance trust, stability and profitability in the financial services sector is far more difficult to see.
The stark truth is that in the decade or so before the 2008 crash, bankers behaved rationally given the excessively low interest rates and credit conditions in the West. This came about as a result of catastrophic policy misjudgements by central bankers, policymakers and politicians alike. Here in the UK, for example, Gordon Brown was running an annual deficit of up to £40 billion even during the boom.
Similarly, Brown's policy of putting public pension liabilities, vast scale PFI building programmes and the renationalised Network Rail off balance sheet – as a means of disguising the true state of the UK's public finances – has played as large a part in the huge debt pile being passed on to future generations as the collapse of the financial system.
The fact that we are still collectively living massively beyond our means to the extent that the government is borrowing £1 in every £5 that we spend is the clearest indication that banks, bankers and the City are not alone in being responsible for our economic plight.
UK business and the economy as a whole desperately need a thriving financial services sector. The Banking Commission's report – amidst some strong recommendations – risks relegating our banking industry to an inefficient, bureaucratic, public utility. This cannot be in the national interest.
Mark Field is Conservative MP for Cities of London and Westminster
Goay Joe Lie
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