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Your support makes all the difference.When it comes to closing the deficit, George Osborne is against any delay. But over banking reform, the Chancellor seems to prefer a more relaxed timetable. The Liberal Democrats' concern that next month's recommendations from the Independent Commission on Banking, led by Sir John Vickers, will not be implemented immediately is understandable.
Mr Osborne has long been inclined to be softer on the banks than his Liberal Democrat Coalition colleagues. The Chancellor is reported to have offered to neuter the commission in return for a deal from the banks on curbing bonuses. Only when Sir John and his committee threatened to resign did Mr Osborne back down.
The banking lobby is now arguing that any immediate ring-fencing for retail banking (proposed in April's interim report) would harm the ability of banks to fund the UK recovery. They seem to want to push any reform action back to 2019. A deficit hawk like the Chancellor is the last person who should be persuaded by this argument. The latest figures from the Office for National Statistics show that Britain's banks are responsible for one-third of our national fall in output since 2008.
As the Chancellor pointed out in June, "take the financial sector out of the equation and economic growth in the rest of the economy during the recovery has actually been above its average rate of the last two decades". Our economy is weak because the banks were out of control. They are part of the problem, not the solution. One of the greatest threats to the economic recovery is a reckless banking sector of institutions that know they are "too big to fail". A separation of retail and investment banking functions would be the best way to ensure we do not experience a repeat of 2008. In the absence of that, ring-fencing is the best solution available. Britain cannot afford another banking crisis.
The big four's profits
Barclays
2010: £6.1bn
2009: £11.6bn
2008: £6.1bn
2007: £7.1bn
HSBC
2010: £11.8bn
2009: £4.7bn
2008: £6.5bn
2007: £12.2bn
Lloyds
2010: £2.21bn
2009: £6.3bn loss
2008: £10bn loss
2007: £4bn
RBS
2010: £1.1bn loss
2009: £3.4bn loss
2008: £24.1bn loss
2007: £10.3bn
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