Curbing Britain's dangerous banking system
A NEW hiring frenzy in the City, with bonuses guaranteed for “only” the first year; investment-banking results for the second quarter likely to top those of the first; an innovative securitisation by Barclays to get bank loans off its balance sheet. The term “business as usual” normally delights tradesmen and their customers. Applied to the banks that plunged Britain into economic crisis, it strikes fear to the heart.
Promised reforms to bank regulation, meant to curb the excess before it starts all over again, are in limbo. On Wednesday July 8th Alistair Darling, the chancellor of the exchequer (finance minister), unveiled plans to make banks hold progressively more capital, the bigger and more complex they are. Banks will be required, in effect, to add capital if they pose especial risks to the system, including higher capital charges if they pay bonuses that encourage short-term risk-taking.
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