The new banking crisis


Just as you thought the banking crisis was over, another one streaks towards you. The £6bn profit announced by Barclays must be relatively good news, even though bank accounts are always complicated and this set has some one-off features that might boost the bottom line. But at least we seem to have got through the fear that the banks could simply collapse. A 'toxic bank', mopping up the remaining bad debt, might help further. Now we're just in a pretty normal, if nasty, recession.

The new banking crisis, though, is political interference. The state now owns large chunks, even majority chunks, in some of our biggest high-street banks. The politicians who arranged this initially said they had no desire to interfere in how the banks ran their business. I said at the time they wouldn't be able to resist. I was right.

The public can't see why a sector that nearly brought us to collapse should be paying its operatives bonuses of thousands, even millions. It may be that they are legally obliged to; that the bonuses are going to high-street branch staff, or to staff selling insurance, rather than executives who made daft decisions. But those details get lost. Yvette Cooper on the radio was even saying of the banks' legal contractual obligations to pay staff bonuses: 'That's something we must look at...these are unusual times.' Yes... and it's not unusual, of course, for politicians to tear up legal contracts when they find it convenient. In evidence I cite habeas corpus, trial by jury, parliamentary privilege, double jeopardy, the right to silence, and the presumption of innocence.

Bankers have indeed made serious mistakes, though a surprising quantity of them were made on the wave of euphoria and cheap credit created by – you guessed it, the same politicians who are now telling the bankers how to do their jobs, despite utterly messing up on their own.