City regulation and bankers bonuses

The interview with Lord Turner in the Guardian of 17 October 2008 sets an agenda for the new era of banking. There are though all sorts of echoes coming through the mists of the years of what was really free for all banking. Behind it all stalks the ghosts of Reaganomics and its insistence in controlling public expenditure and allowing the market to do the rest. What seems to have happened is that the private borrowing fuelled by the loosely regulated banks and encouraged by the market which needed it to pump money through the retail and building sectors has ended up on the public balance sheet as bank bail out. This though perhaps is cynical. One aspect not touched on in Lord Turner's interview is the question of accounting disclosure. Just how could an investor in RBS, for example, know the quality of its assets. There seems to be a mutlidimensional aspect to both assets and liabilities which needs to be understood if a rational investment decision is to be made. It will be intersting to see how the new regulatory environment unfolds.

Writing fourteen years later, there is no new regulation only a promised loosening. To make this worse, bankers pay is sky high. All this is a recipe for it all to happen again. Financial services are a fiction; we need a real economy. 

Some good did come of the banking crisis. Turner’s book Between Debt and the Devil. Also some fiction, The Crunch. 

Ten years on, I offered this reflection 

Was the culprit economic growth? Or greed? Or both?