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(Picture: Matt Writtle)THE government is keen to relax levels of regulation on banks and the wider City.
A Treasury led consultation on post-Brexit rules is nearing its conclusion; one idea in particular is that the Bank of England and the Financial Conduct Authority should have enforcing competition (ie fewer rules) as part of their mandate.
All of this looks like a terrible idea.
To some on the right, all rules are just enemies of wealth creation.
When it comes to the City, almost the opposite is true.
The reason the Square Mile has thrived for centuries and will shrug off Brexit is precisely because there are tough laws that apply to everyone.
They might be expensive to enforce, but they work, mostly.
Since the banking crisis, which came about partly because rules had been relaxed or in the case of Wall Street barely existed in the first place, banks have been required to carry much higher levels of capital.
That’s only a waste of money if you have forgotten how devastating that crash was. The cash can’t be used for other things, but insurance against the banks blowing up is money well spent.
This week Barclays, the bank that could find trouble in an empty room, admitted to a $15 billion trading goof, one that will cost it $450 million.
A $15 billion “clerical error” sounds like a joke and if it weren’t Barclays we might be surprised.
You can’t say for sure that this wouldn’t have happened in London, but it does seem notable that it occurred in the US.
London bankers look at New York with envy, because it is easier for them to make money. It is also easier for them to lose it in ways that rebound on the rest of us.
Our way is better, we should cling on to it.
