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Tyrie: Govt must have stomach for bank fights

Treasury select committee chairman Andrew Tyrie says the Government needs to be ready for any decision which it may have to take when the Independent Commission on Banking Reports in the Autumn.

The commission is being led by Sir John Vickers and was set up by the Government to look at reforming the banking sector to promote financial stability and competition, including the possibility of splitting retail and investment banking.

In an interview with the Guardian, Andrew Tyrie says the Government must have the stomach for the fights it may face as a result of the report.

He says: “When Vickers reports in the autumn and decisions need to be taken it will be important the Government has the stomach for any fights.”

Earlier this week the TSC took evidence from Barclays chief executive Bob Diamond and Tyrie admits the session did not solve many problems the committee is trying to address in its own inquiry into competition and choice in the Banking sector.

The majority of the two and a half hour session was taken up with questions about bonuses.Tyrie intervened at several points during the sessions to allow Diamond to defend himself against exchanges with some of the MPs.

Tyrie says: “It is important people like Bob Diamond understand the scale of public concern about what has happened over the last few years, but it is important that the public understand some of the points he and others have been making.

“Britain has benefited hugely from a successful financial sector over the years, and that has not been expunged by the crisis of the last few years.”


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  1. The crux of the issue is that, for the most part, the banks are private sector institutions over which the government has no jurisdiction as far as what they pay their employees. If they want to continue paying out hundreds of millions of pounds in bonuses, the goverment is powerless to stop them. Similarly, the government can ask the banks to go along with all the targets it wants for lending to businesses, but it has no power to penalise the banks if they say yes, okay but then in practice carry on just as before or set terms so tough that businesses cannot afford to take them on.

    That having said, given that the government is currently the majority shareholder in RBS, then surely it has the power of veto over pretty well anything the board may propose? As things presently stand, the government seems just to be indulging in a lot of impotent chest beating and posturing, whilst the banks are making nothing more than token gestures of cooperation.

    And when is the government going to instruct the Treasury to stop telling the (supposedly independent) FSA to lay off the banks and instead direct its attention to the much weaker and softer target of the IFA sector? More to the point when, if ever, is the FSA going to stand up to the Treasury and declare itself to be an independent and impartial regulator that isn’t prepared to be pushed about and manipulated by a bunch of Whitehall mandarins? Probably never, given that the FSA is neither independent or impartial, despite the pious yet patently phoney proclamations on its website.

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