Source: nef (the new economics foundation)
This is a report of the Good Banking Summit, convened by nef and Compass on Wednesday 25th of May 2011.
The summit was organised in the light of an apparent return to business-as-usual in the financial sector, in response to growing public dissent about the conduct of the banks, and to address the too-narrow remit of the Independent Commission on Banking (ICB), also known as the Vickers’ Commission.
Three years on from the full outbreak of the banking crisis, a unique range of leading figures from academia, finance, politics, the law, consumer and civil society groups gathered in London, alarmed at the failure of banking reforms so far. Over 100 experts representing more than 60 organisations attended to address the question: ‘what would a good banking sector look like and how do we get there?’
The context for the summit was set by government inaction, and a range of other disturbing trends and factors including:
- The absence of proposals sufficient to change the culture of excessive remuneration, itself evidence of surplus profit generation and lack of competition
- A misunderstanding by the Commission of the implications of modern money creation which exposes the system to endemic instability, and which further leaves the public purse out-of-pocket
- The tolerance of continued risk taking for the disproportionate benefit of a few, underwritten by public guarantees
- Failure to resolve the issue of large financial institutions being ‘too big to fail’ and consequently presenting systemic risks. Failure to address the impact of ‘too big to fail’ public guarantees that generate substantial private profit for which the public finances are not compensated. The unfair competitive advantage this circumstance gives to large over small banks, which further entrenches barriers to market entry.
- Inadequate measures to ensure that businesses have access to adequate credit on appropriate terms
- No sufficient remedy to consolidation within banking since the onset of the crisis given the sector’s already high degree of concentration, and the perverse nature of this outcome considering the high degree of concentration existing prior to the crisis.
- A lack of consumer choice and universal service in high street banking, meaning that, as with utility companies, all citizens need a banking service and should be provided for even though some customers will be loss-making to the provider.
Click here to read the full report
Photo from Creative Commons: Flickr: Images of Money
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