All credit to Ernst & Young partner Patricia Jackson today for taking the message to the Lib Dem and Labour conferences that banks should not be split between high street activities and the sort of trading that got them into trouble during the crisis.
this is not necessarily because I back the message, but because she would not have expected delegates at the two conferences to be the most receptive people to such a policy line. Foot soldiers in both parties have taken against bankers quite considerably and trying to stick up for them would have been a bit of a lion’s den experience and no mistake.
Is Jackson right though? That big one. From a risk point of view it can’t be. Disentangling high street banking from proprietary investment activities is a cautious approach that would reduce risk. The question then is whether we want banks like that, will it benefit customers and could the risk therefore be reduced in some other way?
The answer to these depends on your priorities, or what will prove politically expedient.
I have a suspicion the banks might win this argument.
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