27 June 2012

Barclays cheating shows need to disband banks

The news that Barclays has been caught cheating by manipulating overnight interest rates - no doubt at a cost to mortgage holders - shows why Vince Cable is right that the big banks need to be broken up into retail and investment banking.  The chinese walls and regulatory arrangements that have allowed the banks' exectutives to claim there are no risks to them growing bigger and bigger have proved to be worthless.

Vince Cable is oft quoted as saying banks that are 'too big to fail are too big'.  And he's right.  It's clear that there is a cultural problem at the mega banks - they're not interested in the small customers when there are deals to be made with their rich mates.  Bob Diamond and the other senior execs should have the decency to admit they are responsible and go.   In addition the coalition has no excuse to drag its heels over banking reform.  Barclays and the other mega banks need to be busted and put on a human scale where the problems of local people, business and communities are the main focus of their operations.

And it needs to happen now - not in a few years time.

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