"Either they can do it themselves – which frankly is not what has happened over the past year – or the next Labour government will, by law, break up retail and investment banks.
"The banks and the government can change direction and say they are going to implement the spirit and principle of Vickers to the full. That means the hard ringfence between retail and investment banking. We need real separation, real culture change. Or we will legislate."Mr. Milibrand said he was sincere about pursuing this policy.
Critics of such a policy argue it would lead the banks to abandon the UK as their base.
The Labour leader told BBC1's Andrew Marr show he did not believe that would happen but said that, if it did, he was ready to face them down.
"I think what the British people want is a prime minister that will do the right thing for the country," he said. "Do you want somebody who will stand up to the powerful vested interests in our country or not?This whole position would be great except for one small problem: ring-fencing is a solution endorsed by the Blob (aka, financial regulators, bankers and their lobbyists).
No less an authority than Paul Volcker has already said that it will not work in a time of financial crisis.
Regular readers know that ring-fencing is simply another way of substituting complex regulations and regulatory oversight for transparency and market discipline.
Without requiring both 'casino' and retail banks to provide ultra transparency and disclose on an ongoing basis their current global asset, liability and off-balance sheet exposure details, how can any market participant independently assess how much risk is being taken?
Ring-fencing doesn't help in the assessment of risk and ultimately, as Mr. Volcker observed, breaks down at a time of crisis.
The one area where ring-fencing is helpful is drawing attention away from the fact that ultra transparency is needed to truly reform banks.