If the ring-fence is proving ineffective, Parliament should have the option of enacting a forced break-up of the banks, according to Tyrie and his colleagues.
Such a power is likely to act as an effective deterrent to banks that want to push the boundaries and operate on the edge of what is legally acceptable. Do so and you risk dismemberment, is the clear message. But, if adopted, the break-up sanction must be applicable on a bank-by-bank basis, rather than any notion of a blanket industry requirement. If one bank chooses to electrocute itself, others shouldn't be forced to follow.
The seemingly more contrite cadre of managers currently running our banks are unlikely to run their organisations in quite such extreme ways as those who drove them into a wall in 2008. But these recommendations are a way of future-proofing legislation to anticipate the behaviour of their successors in times to come. It shows a welcome foresight not always apparent from Parliament and the Chancellor should adopt them into law.
damian.reece@telegraph.co.uk
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