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How do they get away with it?
‘Of all the many ways of organising banking, the worst is the one we have today.’ Mervyn King, Governor of the Bank of England
The Great Transition campaign to take back our banks
Why is it a problem?
Many people are unhappy with the banks. Some have been likened to ‘vampire squids’ Why is everyone so angry, and are they right to be? Nearly £7 billion will be paid out in City bonuses this year.i The sum of £7 billion is more than the first wave of public spending cuts Attempts to change bad bonus behaviour with a levy failed according to former Chancellor Alastair Darling The banks face a so-called ‘funding cliff’ next year. It means that they need to borrow much more money to keep operating, around £25 billion a month – more than double recent trends. Lack of other sources makes it likely the banks will ask for more public support. £25 billion a month may seem small compared to the total bail-outs of recent years but it amounts to: onehalf of annual current expenditure on education; or one-quarter of annual current expenditure on health; We’re told that there’s no alternative to huge public spending cuts in the wake of the crisis-driven recession. Yet, add together all the taxes in the UK that go unpaid, evaded or avoided and you come to a figure of £120 billion.ii A vigorous effort to collect even a share of that would completely change the debate. Yet the banks, and the accountants and lawyers that win lucrative business from them, are busy finding ever more ingenious ways to help their clients pay their fair share of tax.
How can it be that the banks are in this situation again after getting the biggest bail-out in history? The promised, serious and necessary changes to our banking system simply haven’t happened.
What are we doing about it?
‘A great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.’ Rolling Stone journalist Matt Taibbi on the investment bank Goldman Sachs We’re talking to the main enquiries into the broken finance system like the Independent Commission on Banking (the so-called Vickers’ Commission) and the Treasury Select Committee. We’re working with other researchers, analysts and campaign groups. Together, we’re working to restore a little sanity to our finance system. The ‘Vampire Squid’ animation is a rallying call. The good thing is we’re not alone and real, working alternatives to the current system are available. Did you know that Sweden has a major bank, Svenska Handelsbanken where they don’t give bonuses at all? It gets by just fine. There are even voices at the heart of the establishment like Mervyn King, Governor of the Bank of England, and writers like Martin Wolf of The Financial Times starting to talk about very fundamental reform of the banking system. King is emphatic that some of the much lauded attempts to reform banks are thoroughly inadequate and Wolf questioned why the creation of new money should be left to the ‘foolish lending’ of commercial banks.
bbc. transparency.uk/giant-squid www. here’s a few things that can be done now: Out with the old: Separate retail banking and speculation. Finance the Green Investment Bank to channel finance towards developing the low carbon infrastructure we need. low-carbon. And.uk/news/business-11473352 ii According to tax expert Richard Murphy of Tax Research UK. Break up banks that are ‘too big to fail’. To design one that is fit for purpose and able to underpin the imminent great transition to a new.What can be done to take back our banks? At last questions are being asked about how to make the banking system fit for purpose.neweconomics. and ensures that everyone has access to essential financial services. This would establish a link between what banks do and the people who ultimately bear the risk. and stable economy. There must be a Universal Banking Obligation which covers both location and a banking code covering the principles of fair charges. Introduce a UK Community Reinvestment Act which insists that banks lend money where they are prepared to take deposits. http://www. The IMF has proposed both a new levy on banks as well as a tax on profits and remuneration. Reduce banks to a size at which their failure would not threaten the wider economy. In with the new: Effective incentives for better behaviour: Ensuring fairness. Unshackle and promote alternative financial institutions such as credit unions and community development finance institutions. Introduce country-by-country reporting this would makes banks disclose a profit and loss account and a limited balance sheet for every location (without exception) in which they trade. . high wellbeing. Launch a competition enquiry into the banks that looks also at the role played by ratings agencies and accountancy firms. enabling existing industry to go green and to build the skills to make Britain a world leader in the field.org i Find out more: The Great Transition Where Did Our Money Go? Manifesto for Better Banking According to the Centre for Economics and Business Research. But. But an automatic transactions tax has broad benefits too and should be brought in. Banks should separate out their risky activities and insulate their retail services from the volatility of international capital markets. That means a root and branch rethink. we need to revisit the social and economic contract that banks have with society.co. Introduce a ‘Statement of Purpose’ requirement for banks and banking activities to allow regulators and customers to assess how much the activity contributes (or doesn’t contribute) to a productive economy that serves society and protects the environment. Introduce new controls on bonuses to stop the activities of banks being warped by bankers chasing short-term speculative gains at the expense of long-term value creation. It’s a question nef (the new economics foundation) has long said needs asking.org. Introduce a financial transactions (or ‘Robin Hood’) tax. Banking should be more like a public service. and stability: What can you do? Support the campaign: Sign up and help spread the Vampire squid: http://38degrees. a utility that helps the productive economy function. A competition inquiry is needed into the tight cartel of banks that raise funds for the government and companies in the international capital markets. Introduce a Universal Banking Obligation and ensure a taxpayer ‘quid pro quo’ for future bank support. government plans to measure well-being pose an even deeper and long overdue question about the actual purpose of the economy. even on its own terms the banking system is broken. Create a national Post Bank based on the existing Post Office network to address financial exclusion and provide real. fairly priced competition in local communities. But to get us going. and back them with an adequately resourced Big Society Bank.