What bold ideas?

OK Here are some.

1) An end to fractional reserve banking.

2) An end to limited liability for bank directors.

3) An end to government guarantees for depositors.

4) An end to cross channel ownership in the financial services sector.

That would sort it out.

… able to accumulate too much debt.

you often write something like this, and I never know what you mean by it.

you do know that deposits in our current accounts are debts, from the bank’s point of view, but I presume you don’t mean “able to accumulate too many retail deposits”. And you know that balance sheets have to balance, so when a bank lends to a firm there must be an equal liability (a debt), but I presume you don’t mean “able to lend too much to firms”. Or maybe you do.

the only sense I can make of it is either

1. you want the absolute size of bank balance sheets to fall [which is actually happening - it's why banks aren't lending] So when you say “accumulate too much debt” you also mean “accumulate too many assets” – because balance sheets balance.

or

2. you mean something about the composition of liabilities, which is a matter of ratios and not absolutes. So you mean that you want leverage to fall, meaning the ratio of equity (liabilities) to assets rises and ratio of debt (liabilities) to assets falls.

2. is very sensible but is the same thing as increasing capital reserve ratios, which you have previously been dismissive of

I hope he does not say a BMA style body. The BMA is a trade union – one of the most powerful and successful in looking after its members. A BBA would look after its members. What I think he means to say, and hope he does, is a GMC style body.

Put the Quakers back in charge of Barclays, which they founded, as they also founded Lloyds. In what I wish that I could turn into something witty or profound, all four of the Cadbury, Rowntree, Terry and Fry families were, and presumably still are, Quaker. Banks once again run on the principles of Simplicity, Truthfulness, Equality and Peace are exactly what we need. Likewise, confectioners, among so very many other concerns. But most pressingly, banks.

All retail banks should be transformed into mutual building societies, ironclad as such by the Statute Law that already forbids building societies from engaging in investment banking, and would therefore automatically forbid all retail banks from so engaging if they had all been so transformed. I do occasionally receive communications from people who cannot get their heads around that one. But it is the law; look it up if you don’t believe me. And those people’s complete inability to deal with the very concept of mutualism is an even stronger argument in its favour.

The roots of the American Republic, of the campaign against the slave trade, of Radical and Tory action against social evils, of the extension of the franchise, of the creation of the Labour Movement, and of opposition to the Boer and First World Wars, are all in Catholic, High Church (and thus first Methodist and then also Anglo-Catholic, as well as Scottish Episcopalian), Congregationalist, Baptist, Quaker and other disaffection with the Whig Revolution of 1688, such that within those communities, long after any hope of a Stuart restoration had died, there remained a sense that the Hanoverian State, its Empire, and that Empire’s capitalist ideology were less than fully legitimate, a sense which had startlingly far-reaching consequences. Radical action for social justice and for peace derived from testing the State and its policies against theologically grounded criteria of legitimacy. It still does.

In reclaiming, reconstructing and redeploying that tradition, each of those communal bearers of it has a part to play. In the Quaker case, it is the Four Testimonies, set within the present relocation within the Great Tradition, both of the Puritan and Anabaptist movements behind the rise of the Friends, and of the Radical Dissent to which they contributed so significantly and substantially.

In large part, that will involve the correction and redirection of Quakerism, especially as it has usually manifested it since the middle half of the twentieth century. However, it will also involve other correction and other redirection: correction by, and redirection towards, the Simplicity, Truthfulness, Equality and Peace to which Scripture and Tradition bear witness, making them fundamental to all three of the authentic, indigenous, popular political traditions of this country.

The Co-Op bank is about to buy a lot of branches that Lloyds has been forced to sell, which will be a step forward for mutualism.

Given that Balls is the highest place Co-Operative & Labour MP, and the stuff spouted by Cameron early in his premiership, I would have hoped to have heard more about the option of mutuals and co-operatives as an alternative. Or is Balls as much of a waste of money as Cameron is two-faced?

The de-mutualisation of building societies has had a role in removing people’s choices when looking for financial services so it’s time something was done to restore the sector.

You want “don’t”, not “doesn’t”, in the title.

Amazing insight, I know.

(this isn’t just pedantry on my part #2 by the way, it matters for those “bold ideas” – if you want to achieve 1., tax balance sheet size, if you want 2, revise capital requirements etc.)

A few questions (some of which may be rhetorical):

1. “Britain’s big five high street banks to be [...] forced to sell up to 1,000 branches…”

To whom? Another bank? And what if the buying bank already has a branch at or near that location? Guess what? One of those branches will be closed and people will lose their jobs.

2. “…two new privately run ‘Challenger Banks’…”

Why privately run, given that it has been privately-run banks which have led us to where we are now? And naming them after the ill-fated Space Shuttle doesn’t entirely inspire confidence.

3. “…to offer extra choice and competition and reduce bank charges”

If that doesn’t happen with five banks in the game (and it doesn’t very much), increasing the number to seven isn’t going to change much, especially when the upper echelons of these ‘Challenger Banks’ will have to be recruited from those already in the upper echelons of the existing ones.

4. “New ‘transparency rules’ [...] to stop discrimination against people in less well-off regions and inner cities.”

A noble idea, no doubt; but isn’t that how the sub-prime bubble came into being in the US? You know, one of the first stages of the world economy’s journey into the deep and smelly?

What is surely needed as a bare minimum is the introduction of an updated Glass-Steagal or equivalent, so that banks which are there to hold savers’ deposits or private accounts, and to lend to individuals and SMEs, are firewalled from the chancers. Oh, and fines on the banks levied iin such a way as their costs can’t be passed on to the customers, only to the directors and shareholders.

There seems to be nothing towards this in either Balls or Milliband’s rhetoric. Great thinking – who said that two Eds were better than one?

@8 The Judge

“What is surely needed as a bare minimum is the introduction of an updated Glass-Steagal or equivalent, so that banks which are there to hold savers’ deposits or private accounts, and to lend to individuals and SMEs, are firewalled from the chancers. Oh, and fines on the banks levied iin such a way as their costs can’t be passed on to the customers, only to the directors and shareholders.”

How exactly would a Glass-Steagal like Act have prevented the current financial crises? It is retail banking which has had the majority of the large scale problems.

Fines will hurt Directors and Shareholders – do you really think a bank can just pass on the charges with no impact on their customers?

Here is an excellent piece by Alistair Heath on Milliband’s proposals:

http://www.cityam.com/latest-news/allister-heath/why-it-must-be-made-much-easier-switch-bank-accounts