I admit that not everyone in the room was impacted so strongly as I— many principles Mike teaches are well- known by professional educators. I’ d always thought we instructors were part of that group, but in fact school teachers receive a great deal of…

Reply: It's my content and it is not to sell anything

Contrast the idea that bankers at Davos are now said to be in favour of a global banking insurance levy. What that really means is they'd like to carry on with the same reckless practices as before, but with the bailout fund funded by customers, since as Jamie Dimon (JP Morgan CEO) pointed out "All businesses tend to pass their costs on to customers." And if the illusion of the fund being large enough to cover the next crisis is shattered, then tant pis. In the mean time, bankers plan to reward themselves generously for taking outrageous risks. Not on my dime, buddy!

One: Assert the need for more banks and a much stronger enforcement of competition policy.

Agreed.

But I am not happy with the following sub-clause, splitting up the banks that we have shares in. Let me explain why.

Firstly, we do not wholely own RBS and we are not majority shareholders in Lloyds. Other shareholders have legal rights ( and quite rightly so )

It would not be difficult to solve the problem with RBS. I believe the government holds 84%. if we purchase another 6% we then have the legal right to by out the remaining 10% and as 100% owners we can do as we wish.

Buying out Lloyds would require tens of billions, which I don't think is realistic.

Secondly, splitting the banks up would be very expensive and destroy the investment we have in them. Lets take the Lloyds HBOS merger as an example ( ignoring other shareholder issues, sort of ).

Lloyds has kept most if not all of HBOS brand names. However, they have been disposing of the branch network as fast as they can. This is something that is very expensive to re-create. They have also laid off tens of thousands of staff. This would be expensive to re-create and the loss of knowledge is permanent.

Lloyds will have done a lot of work to integrate computer systems and will have thrown away many of the HBOS software systems making revival difficult and expensive.

All in all this would mean that we, the taxpayer, would take a huge hit on our investment in the banks to try to split them up.

But, I think that there is a better way to ensure more competition, that we both agree is needed. But I'll come to that later.

>Two: provide simple counter cyclical rules on cash and capital to ensure >we have better endowed banks in future

Totally agreed.

>Three : Prune the other regulations, so more businesses can start up in >competition against the established players.

Lets start by listing what we have in competitive banking:

RBS
Lloyds
Barclays
HSBC
Santander
Nationwide
Tesco's and Virgin are attempting to break into the financial services market and have shown inclination to become banks.

That's not bad but it is far from perfect from a competition point of view.

I'm much more interested in seeing new entrants to the markets.

Why is that Virgin and Tesco are holding back from becoming retail Banks. Why have French and German banks not entered the UK retail market? Why have U.K. banks not entered the French and German markets.

To my mind, breaking the barriers to entry for banks is far more important then spliting up banks.

Just my 2 pence worth.

/ikh

I understand that from the Great Depression until the 1970/80s, there were restrictions in the USA such that no bank could operate in more than one US state. This kept banks small, such that if one of them failed it would not overwhelm the entire system. But the trend towards globalisation in all industries has been felt in banking too and now we have not just international banks like Abbey-Santander, but real giants like the nominally British HSBC which would wipe out individuals and businesses in so many countries around the world should it ever go under that the UK taxpayer would never be able to protect them all.

One approach could be to have global regulation, but a single worldwide regulator robbed of any alternative regulatory models would likely evolve like any monopoly into an institution with a tendency to over-regulate. This is especially so considering that the costs of regulation are not borne by the regulator themselves, but by the businesses that must comply with their rules.

So I am wondering if we can keep the benefits of competing national regulatory regimes in an era of global banks? Is there a way to ring-fence say the part of say HSBC that operates in the UK and regulate only that bit from London? Or perhaps for the UK government to only use UK taxpayer money to protect UK-registered businesses and citizens from having their deposits wiped out by any bank in the world, with other governments being called upon to underwrite the savings of deposits that their citizens and businesses deposit in the UK? If this is not possible, then UK regulation of global banks based in London would not seem feasible and either a world regulator emerges (which is likely to be bad monopoly itself) or the global banks should be broken up and rules instituted around the world similar to the old ones in the USA that prevented banks operating in more than one US state.

Apologies if these are basic questions, but it seems quite a conundrum to me!

The UK will be a less profitable and riskier place because of it.

says a lot that simple bit of information

No doubt he will want fixed exchange rates to be controlled by the wretched International Mischief Fund, which is headed by grossly overpaid Frenchmen. There is only one sane attitude to fixed exchange rates, Bretton Woods and the IMF as an institution.

KILL 'EM AND BIN 'EM.