| Nick Cohen | Comment is free | The Observer Here
While we rail at MPs, the City gets away with murder
One Comment to “While we rail at MPs, the City gets away with murder”
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One thing we’re not short of at the moment is distractions. City bonuses for instance: a symptom not a cause. As Nick points out, our troubles stem from the conversion of investment and universal banks into homes for large proprietary trading outfits, in-house hedge funds.
Reimposition of Glass-Steagall would be one way to put these operations out of harm’s way. Another way to do it would be to adjust capital adequacy ratios so that prop trading becomes radically less profitable – and on the way, less risky and less prone to pay out large bonuses.
Relative to reimposing Glass-Steagall this would be straightforward. The Basel international capital adequacy framework already provides a way to do it, a mechanism that banks across the world are well-used to complying with.
What’s stopping politicians from both main parties from cracking on with this? Capture by the financial interest is one factor. Another more immediate reason is tax. Receipts from prop trading profits are enormous – Goldman, a hedge fund in all but name, will pay £2bn in tax this year alone. Short term gain, long term repetition of catastrophic disaster.
But screw tomorrow, eh?
Nick Cohen
