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Taming the banks: is the new regulatory framework fit for purpose?

3 Apr 2012
Start time
7:30 PM
Tempest Anderson Hall
Hugo Radice
Taming the banks: is the new regulatory framework fit for purpose?

Event Information

Taming the banks: is the new regulatory framework fit for purpose?
Hugo Radice, Life Fellow, School of Politics & International Studies, University of Leeds

In September 2011, the Independent Commission on Banking under Sir John Vickers presented its final recommendations on reforms to improve stability and competition in UK banking. The most prominent proposal was the ‘ringfencing’ of risky investment activities, so that the mundane retail banking needs of businesses and households would not be threatened by future financial crises like that of 2007-9. Outside the UK, the Eurozone sovereign debt crisis that erupted in 2010 has revealed the continuing vulnerability of banking everywhere to the vagaries of financial markets, while the Basel III negotiations to provide a robust global regulatory framework for banks have proceeded at a snail’s pace. Meanwhile, on the fringes of the official debates, many critics are asking whether the present proposals can deliver a banking system oriented to social needs, rather than the redistribution of wealth and income from the poor to the rich.

This talk will examine the origins and consequences of the recent crisis; put the existing reform proposals in the context of broader changes in global capitalism and its governance; and outline more radical proposals to address financial exclusion and bring banking under popular democratic control.

Hugo Radice taught economics and politics at the University of Leeds from 1978 to 2008. For his recent articles and blogs see http://www.polis.leeds.ac.uk/about/staff/radice/

by Ken Hutson

Hugo explained the whole global credit crunch crisis from its genesis in 2006, triggered by the US housing slump and unaffordable mortgages, to the present day. A complete collapse of the global banking system was averted by co-ordinated rescues by central banks and the G20 with subsequent modest recovery aided by fast growth in emerging economies.

Banks shoulder the blame, having engaged in dangerous practices such as securitisation of loans, credit derivatives, exploitation of gullible investors and excessive speculation. All this exacerbated by reward systems of top traders and executives, light touch regulation and slack international co-ordination. However, governments, businesses and households all connived in this bankers’ ramp by taking on excessive debts.

Believing that current reform and regulatory measures are somewhat ineffective and slow, Hugo suggested an alternative agenda. Full separation of retail and investment banking, regrowth of low-cost mutual and public banking, a public infrastructure bank and a rebuilding of democracy and trust in public institutions around a world-wide agenda of equality, social justice and sustainable development.



Taming the banks from Yorkshire Philosophical Society on Vimeo.



Hugo Radice is a contributing author to the following book which is on a theme related to this lecture: