Labour Chancellor Rachel Reeves revealed her plans to slash the rules and regulations that have inhibited the banks and financial speculators from taking risks, the risks that accelerated the world capitalist financial crash in 2008.
In her Mansion House address to leading financial bosses last night, Reeves announced a whole list of deregulation changes that she claimed would have ‘trickle down’ benefits for households across Britain.
Declaring that cutting regulations on the banks and the financial sector is ‘key to unleashing UK growth’ Reeves claimed that she has ‘placed financial services at the heart of the government’s growth mission’.
According to Reeves, the world banking crash in 2008 has made Britain too ‘risk-averse’. She wants a return to the good old days when the banks and financial sector took massive risks in the hope of making even more massive profits.
In 2008, the big US investment bank, Lehman Brothers, crashed after years of making mortgage loans to anyone who asked, with no checks on the ability of the lender to repay.
Lehman Brothers was not the cause of the bank crisis, it was just the first victim of the gigantic expansion of credit by the capitalist financial system – banks with small amounts of assets lending vast sums of money and making billions of profit in interest on these loans.
Lehmans led the way in what was called the ‘subprime mortgage’ racket in the US, which involved giving large mortgages for house buying to people who simply couldn’t afford it. Mass defaults brought down Lehmans and threatened to bankrupt every bank throughout the capitalist world involved in similar schemes.
In Britain, the entire banking system had to be bailed out to prevent a complete collapse. The Bank of England pumped tens of billions of pounds into propping up the financial services industry with the working class paying the cost through all the years of Tory austerity cuts – cuts that to this day have devastated the NHS, Welfare State and the wages of workers.
In order to placate the anger of workers over being made to sacrifice in order to keep the bankers and speculators from bankruptcy, the promise was made that legal regulations would be imposed to curb the capitalist financial world.
For years the banks have railed against rules limiting their ability to wildly speculate and make huge profits safe in the knowledge that they would be bailed out by the working class when their ‘risk-taking’ inevitably led to catastrophic crash.
The Labour leadership had their support in the general election on the basis of Reeves’ and Starmer’s pledge to be a government for the bankers prepared to institute a ‘bonfire of the regulations’ to satisfy their lust for profit at all costs regardless of any risk.
Reeves has announced the first steps by cutting restrictions on minimum wages required for first-time mortgages. Previous levels of wages required for mortgages will be ‘relaxed’, opening the way to saddle households with large unsustainable debt in what is a return to the days of the subprime mortgage crisis of 2008.
But this is not 2008.
Today, the crisis of the British capitalist system is vastly greater than in 2008 as the country crashes into bankruptcy, drowning in a massive national debt approaching £3.22 trillion – a debt that was massively increased by bailing out the banks.
The working class has also advanced forward and has demonstrated that it will not put up with sacrificing its lives for the profits of the bankers and hedge fund billionaires.
The intensification of the capitalist crisis has revolutionised the working class and youth as it has become glaringly apparent that bankrupt capitalism has reached the end of the road.
The way forward is for the working class to use its power by forcing the TUC to call a general strike to bring down the Labour government and bring in a workers’ government that will expropriate the banks and bosses, building a socialist planned economy.
The historic task of the working class is to dump bankrupt capitalism in the dustbin of history by the victory of the British Socialist Revolution – this is the way forward.
