This is true whether it applies to implementing the recommendations of the Independent Commission on Banking or requiring that banks provide ultra transparency by disclosing on an on-going basis their current asset, liability and off-balance sheet exposures.
The recent row over David Cameron's eurozone veto has exposed two radically different views of financial services and the City of London.
One is that it is a vital national interest: a unique network of innovative firms and workaholic employees who generate shedloads of tax revenue for UK plc. The other is that it is a source of systemic instability, unfettered greed and industrial-scale tax dodging. Antagonists line up on either side of this divide: right versus left, Europhobes versus Europhiles.
The uncomfortable truth is that both of these caricatures are true....
Facts should occasionally be allowed to intrude...
Within the City itself there is a complex ecology, much of it uncontroversial. The UK is a world leader in professional business services, for example. The pensions and insurance industry has had its share of problems (pension mis-selling, Equitable Life) but it has a different maturity structure from banks and does not pose the same systemic risks.
Even within the banking sector, which has caused so much reputational damage to the City, it is a small number of rogue institutions and the sub-caste of traders in investment banks who have caused most of the damage.A small number of institutions, yes. Unfortunately, they happen to be the largest global financial institutions.
After 2008 no sensible government (and few bankers) believe that the free-wheeling days of the past can continue.While no sensible government may want the free-wheeling days of the past to continue, to date, no government has stepped up and required the one reform that would end the free-wheeling days: requiring banks to provide ultra transparency.
As for the banks, their lobbyists would like to protect the status quo. Four years into the crisis, the lobbyists have done a very good job as the banks have continued in their free-wheeling ways.
The issue is a practical one of how and where to regulate: nationally; globally, as with the Basel capital rules; or at the regional-EU level.Actually, this is an issue brought up by the lobbyists looking to delay any reform and less any reform's bite.
The scale of British-based banks (with balance sheets valued around 500% of GDP) and the risk they pose to the UK taxpayer has meant that Britain has had to act ahead of other countries.
That is why the government has moved to ringfence the "traditional" banking functions from "casino" investment banks following the Vickers report: tougher action than either the EU or the US.
We led the way with a bank levy, and measures to expose bank top pay to greater transparency are also unilateral and necessarily so....Comparing a ringfence to any action taken by the EU or the US is an unfair comparison.
As conceived by the European Commission and passed by the European Parliament, Article 122a of the European Capital Requirements Directive would have required disclosure of the current performance for each asset backing a structured finance security. It was the gold standard against which all other reforms proposed since the beginning of the solvency crisis failed by comparison.
However, City's lobbyists did not stop fighting after the passage of Article 122a. They turned to the Committee of European Banking Supervisors regulators which was in charge of implementing Article 122a. The City's lobbyists got the regulators to agree to an interpretation of 'know what you own' that was consistent with the existing disclosure practices for what are known as opaque, toxic sub-prime mortgage backed securities.
The issue of EU financial services regulation is, in any event, a sideshow compared to the much bigger question of averting a catastrophic outcome to the eurozone crisis and a deep European slump.
And in the UK we need to put the whingeing of the City to one side and concentrate on delivering our core narrative, to achieve growth by rebalancing the UK economy. Towards advanced manufacturing, creative industries, higher education and professional services – and therefore with less reliance on banking – from London to provincial Britain. The bankers don't speak for Britain; the coalition will not put their interests above the rest of the country.Great! Given that ultra transparency ends the solvency crisis and the need for governments to bailout their banks, I expect that the coalition will champion its adoption.