socialmedian: Still big. Still unbeautiful

Add News Flash

User-submitted headlines for this story

Clips

Still big. Still unbeautiful | Will Hutton

Source: guardian.co.uk Politics

Nov 03, 2009

Summary

The chance to break up UK banks has been funked – the City lobby made sure of that

Thank God for the European commission and its competition chief, Neelie Kroes. Without her persistence, Britain would have one of the most concentrated and least competitive banking systems in the world. Even after yesterday's announcement about the "break-up" of Lloyds and RBS in return for another £40bn of government investment, Britain has five mega banks and a handful of minnows. Big remains beautiful.

But big is not beautiful. For decades the story has been that big banks are good for financial stability and for the economy. The bigger the bank, it was argued, the more diversified its risks and the better role it can play as a shock absorber when the markets crash or confidence evaporates. That might have been true before the emergence of a global capital market, but we now know that giant banks are what the Bank of England director, Andrew Haldane, calls super spreaders of financial contagion. They threaten financial stability.

Nor are big banks good for the economy. They ar

...Read the full article

Comments (0)

Add Your Comment