Labour MP Michael Meacher has called on his party to lead the charge for a full separation between retail and investment banks.
On Saturday, senior Liberal Democrats wrote a letter to the Guardian saying the Government needs to go further than the Independent Commission on Banking’s interim proposal of ringfencing retail banks and making them hold more capital if it wants to protect the taxpayer.
Writing on his blog, Labour MP for Oldham West and Royton Meacher (pictured) says the Liberal Democrats are taking the “radical lead” on the issue and Labour must avoid following behind their “rebellion”.
He says: “Where is Labour? There is no question whatever this is the necessary reform not only to end the curse of ‘banks too big to fail’ but also to lay the foundations of a sustainable revival of Britain’s manufacturing industry. Why is Labour not leading the charge on this?”
In April, the ICB’s interim report called for retail banks to be ringfenced and made to hold at least 10 per cent core tier one capital, 3 per cent more than the international minimum standard laid out by Basel III.
Commenting on its release at the time, Shadow Chancellor Ed Balls said the reforms must protect consumers and taxpayers, have international agreement to protect banking jobs in the UK and support long-term investment.
Meacher adds: “Ed Balls was of course city minister when the big banks so terribly abused their position by hitching themselves so recklessly to the sub-prime market derivatives fiasco and the Brown administration failed to put in place the institutional reforms necessary.
“That does not absolve Labour from learning the lessons of that episode and demanding what is arguably the most crucial strategic reform needed in today’s economy.”