Yesterday the Tory chancellor, George Osborne, introduced legislation on banking reforms – reforms which he is desperately trying to insist will prevent the continuing collapse of the banking system.
This legislation is the coalition’s response to the 2011 Vickers report into the collapse of Northern Rock bank and the ensuing banking crisis that resulted in the taxpayers bailing out the bank to the tune of over £2 billion.
This amount was dwarfed by the money poured into the Royal Bank of Scotland and Lloyds to stop them from going bust – over £66 billion.
In the two years since the Vickers report the banks have been rocked by scandals and crises.
Two of Barclays top executives resigned this week in the wake of a £290 million fine for their part in the Libor rate rigging scandal while RBS faces a fine of £500 million for their involvement in the scam.
In addition, HSBC has just been forced to pay out £1.2 billion in the US in order to avoid prosecution over allegations that for ten years it was involved in money laundering activities on behalf of drug cartels and alleged terrorist organisations.
These scandals and demands for bailouts to keep the banks staggering on has produced complete revulsion amongst workers and the middle class, leading to this pathetic effort by Osborne to try and convince people that the government can control the banks by implementing some of the ‘reforms’ advocated by Vickers.
These amount to little more than ring-fencing the high street banking from the investment side of the banks.
This scheme peddles the lie that some parts of the banks, that is the ones that deal with individual customers and small businesses, can be isolated from the risky investment side where multi-billion deals, including it appears money laundering and rate rigging, are carried out and which have provided the vast profits of the banks.
When this scheme was floated by Vickers it was met with general disbelief that this in any way could tame the banks, so now Osborne has tried to beef it up by claiming that he is ‘electrifying the ring-fence’ saying that if the banks don’t follow the rules they will be broken up and fully separated by the banking regulator.
This is sheer nonsense, an idle threat that no-one in the banking industry is taking seriously.
The fact remains that it is not Osborne or the coalition that call the shots, it’s the banks.
When politicians like Vince Cable complain that the banks are too big to fail and must be cut down to size, what they fail to say is just how massive the banks are.
According to figures three banks – RBS, HSBC and Barclays – have gross loans and investments equal to, if not in excess of, the annual GDP of Britain.
In other words they have lent more than the entire economic output of the nation.
When they collapse the entire capitalist economy of Britain goes bust, and political pipsqueaks like Osborne, Cable and Cameron are powerless to do anything about it even if they wanted to.
It is the banks that are calling the tune and what they are demanding is that all the government expenditure on the welfare state, education, the NHS and public services be halted and the money handed over to them to prevent their bankruptcy.
There is only one way in which the banks can be cut down to size and that is through their expropriation by the working class.
This requires urgent action by the unions to prevent the devastation of public services in order to prop up the banks through the organisation of a general strike to kick out this government and go forward to a workers government that will nationalise the banks and place them under the control of the working class.
