So after all the grillings of various Barclays and RBS bosses (many of whom have now departed their jobs amid Libor and PPI scandals), we were all expecting some tough new legislation to take the banks down a notch, right? At least, that’s how it felt when Andrew Tyrie, chairman of the Parliamentary Commission on Banking Standards (PCBS) sat back in his chair pulling apart millionaire executives.
Well, now he says that the new legislation presented on Monday, designed to create an ‘electrified ring fence’ for retail banks (and protect them from risky investment banking) was ‘so weak as to be virtually useless’. His comments are bad news for Cameron and Osborne, who have to walk a fine line between being friendly to business (as is their wont) and being seen by voters to be tough on the nasty bankers.
Tyrie warned that parliament needs to wait and see the whole proposal for amendments to banking legislation because ‘the amendments put forward to electrify the ring fence demonstrate the need to remain vigilant’. He said that the they ‘fall short on a number of important points’, including his own demand that banks should be forced to retain larger capital buffers.
You don’t need much more information than to know that the Treasury quickly welcomed the new proposals, and the British Bankers’ Association welcomed the Treasury’s welcoming of them. If the BBA is welcoming the approach of banking reform, then the effect that everyone was after is not really being had, is it?
Still, you can bet your bottom dollar (if you haven’t spent it on a PPI deal you didn’t need) Tyrie will keep on fighting. Whether anyone in government is listening is another question...