THIS week, in an attempt to cash in on the universal hatred felt by the working class and middle classes towards banks and bankers, Labour leader Ed Miliband has been busy floating suggestions that any future Labour government would be prepared to ‘tame’ the banks and seriously cut the gigantic bonuses paid out to chief executives.
Miliband’s populist proposals amount to little more than vague promises about placing a cap on the market share of individual banks with absolutely no indication of how this would be achieved or exactly how this would halt the world banking crisis.
At present, the four big banks – Lloyds, RBS, Barclays and HSBC – control 85% of retail and personal banking in Britain.
Miliband is proposing to ‘force’ these giants to flog off branches of their banks while a Labour government would create a series of smaller ‘challenger’ banks to break the monopoly of the big four, introduce more competition into banking and so abolish the banking crisis at a stroke.
Alongside this promise to ‘reform the banking system’, the very system that has brought capitalism to its knees through the international banking crisis, a crisis which the bankers are determined will be paid for by the working class and middle class, Miliband called for the coalition government to veto an attempt by RBS chiefs to pay themselves bonuses of double their already astronomical salaries.
The bankrupt RBS, which had to be bailed out by the taxpayer and exists as a virtually nationalised bank 80% owned by the state, is seeking shareholder approval for this bonus bonanza and Labour is calling for the government to vote against.
Despite the fact that Miliband’s proposals and vague promises are merely vote catching soundbites that pose no threat whatsoever to the banks, they have earned him a stern rebuke from the governor of the Bank of England, Mark Carney.
Carney, the Canadian banker brought in by Cameron and Osborne to represent the interests of the banks and financial sector, was quick to rubbish Miliband’s plans and slap him down, despite the fact that Miliband could be the country’s next Prime Minister by the will of the people.
Carney has obviously got complete contempt for this will. He pointed out that caps aimed at limiting a bank’s share of the market existed in America and had completely failed to prevent the banking collapse of 2008.
He said: ‘In the United States, there is a hard cap on deposits – you can’t have more than 10 per cent of the deposit share in the US and that’s a rule that’s been in place for decades. And I think that’s one of the points I’d make from a financial policy perspective – that obviously that rule in and of itself did not prevent the creation of large, systemic financial institutions.’
According to Carney, any attempt to place limits or restrictions on the banks is bound to fail, they are simply too big and too powerful to be controlled by mere elected politicians.
This blunt assertion, that the banks cannot be ‘tamed’ or brought under control within the capitalist system, was underlined when he turned his fire on Miliband’s appeal to the coalition to use the government’s veto as the largest shareholder in RBS to prevent huge bonus payments to executives of the sinking bank.
Carney stated that he does not back a ‘crude bonus cap’ and that he ‘absolutely’ agreed that a cap on bonuses was not the right way to control bankers’ pay.
The unmistakable message from this spat between Miliband and Carney is that, under modern capitalism, the banks and the financial system are in charge – Carney is the boss, Miliband at best is a candidate for the job of head butler. Capitalism and its banks cannot be reformed or tamed by any future Labour government that is, anyway, totally committed to keeping capitalism and its banking system going at the expense of the working class.
The only way to deal with the banks and put an end to their dictatorship and the catastrophic crisis they caused, is by completely expropriating them, nationalising every single one of them without compensation and placing them firmly under the management of the working class as part of a planned socialist society.
There is no other way.