Independent Commission on Banking (ICB)

Just wanted to post an update responding to what the Banks said about the Independent Commission on Banking (ICB) submission.

First off, it may sound like I am defending the ICB, but don’t get me wrong. The ICB submission is focussing on the wrong things, I am not a fan,

The Positive Money submission for full reserve banking was not taken too kindly by the ICB.

Positive Money’s submission recommended taking away banks ability to create money out of thin air through debt.

Even though Mervin King seems to agree with the flaws in the fact that banks create money, it was still considered radical.

I am not waiving the flag for the ICB, but banks comments to ICB are even worse.

So lets start with Lloyds…

Lloyds Banking Group Response…

“It is unrealistic to assume that reforming the financial sector will eliminate boom and bust given the many other causes of economic cycles; the objective of reform should instead be that banks act in a stabilising rather than destabilising way.”

Simon Dixon Response…

Two words – Absolute rubbish!

Giving banks the ability to create our nations money is the only reason why we have boom and bust.

They lend money then don’t lend money, they increase our money supply then decrease it – that is boom and bust.

We do spend money trying to stabilise banks – trillions, but unfortunately economists think that allowing banks to create money is the way to do it.


Santander UK Response…

“We agree that prudential measures aimed at reducing risks to the stability of the financial system are necessary. However, the ICB’s analysis does not take into account a number of factors that provide a clearer picture of the risks associated to the size of a financial institution relative to its home country.”

Simon Dixon Response…

Banks are so big, because they have a license to create money and an unjust £100bn subsidy each year for the privilege.

It is not because they have driven huge innovation like Apple and many others.

If we were not relying on them for the creation of money, we would not care if they collapse, beaches it would not reduce the money supply and cause a crisis.

Barclays Response…

“Barclays is, however, sceptical about the net contribution of a ring-fence to resolution and the Commission’s wider objectives and does not believe that implementing a retail ring-fence is necessary. We are concerned that this structural measure, especially if enacted in the UK alone, will have detrimental unintended consequences for customers, financial stability, competition and the economy.”

Simon Dixon Response…

Firstly, it is hugely important for people to understand what banks are doing with their money when they deposit it, it is even more important for people to know whether they are going to use it to speculate or create a housing bubble.

I agree that ring fencing does not completely solve this issue, but it goes a step further to achieving this.

The more transparent way recommended by Positive Money to achieve this…

Firstly, separate current accounts and make them accounts where banks are not allowed to invest deposits or use the money in any way. It is kept off the banks balance sheet so that in case of bankruptcy from the bank, no current account money is lost from investment accounts (Where the depositor and the bank share the risk and agree to use the money for investments / speculation upon agreement of terms with no government bailout).

Secondly, make it compulsory for banks to disclose how they are going to use the money (So you can decide whether you want to fund weapons of mass destruction, speculate on commodities or fund the move to green energy).

Barclays fear mongering over economic stability etc. is idle threats designed to fear politicians into not reforming.

There is nothing more unstable than our current system.

HSBC Response…

“We believe the UK should be cautious in creating additional complexity and differentiation from the mainstream of the European and broader Western financial system regulatory reform at this time. Some additional safeguards are warranted to curtail total UK exposures and to set a long term direction of travel but the international agenda which is already in train will, in our judgement, be sufficient to achieve the desired improvement in financial stability and any further measures need careful cost/benefit justification.”

Simon Dixon Response…

Nothing that is currently being done through regulations will achieve financial stability. We will have another crisis and continue until we look at money.

I agree excessive regulation is prohibitive, but allowing banks to create money is massively destabilising, unjust, causes massive inequality, causes third world debt and a transfer of wealth to the banks.

Bassell III and other regulations are not about banking reform, but about patching up a system that will never work and is guaranteed to crash.

HSBC shareholders should want a sustainable business model, as they are about to lose all their money in paying bankers bonuses before the bank goes bankrupt after the government can no longer afford to bailout during the next inevitable crash.

Royal Bank of Scotland Response

“The arguments around ring-fencing are complex but vital to get right. Inevitably, the ICB’s terms of reference involve trade-offs. RBS is confident that international regulatory action is eliminating implicit government support, while the tools to deal with future crises are steadily developed. Britain does not need to handicap itself to achieve these goals.”

Simon Dixon Response…

This is idle threats that the UK will all of a sudden collapse as banks leave the UK and do business elsewhere, if you regulate them too much.

If the ICB was looking at the way banks create money, they would know that taking away banks ability to create money is essential to prevent financial crisis.

To reform the way money is created is to reform an entire currency, which means anybody that wants to do business in that currency must play by the rules.

No Bank is going to give up the opportunity to do business in GBP, the banks cannot cut off their nose to spite their face and leave the UK in ruin by leaving, as they try to threat.

Ignore these threats, it is blackmail.

Standard Chartered Response…

“When we look at the ICB proposals within the context of everything else that has already happened or is in prospect, we are deeply concerned. Whilst the package of reforms may have some benefits in reducing the potential impact of future financial crises, they may actually increase the probability of bank failures, and will certainly impose a significant cost on the UK economy.

In combination with the FSA’s “super-equivalent” approach to Basel III and the UK bank levy, the ICB proposals could potentially result in much higher costs of credit for UK industry and consumers, a much weaker banking industry and a sharp decline in London’s competitiveness as a international financial centre. These are outcomes the UK can ill afford.”

Simon Dixon Response…

Actually, I agree with this one, the banks will continue to cost the UK economy billions under ICB reforms and ultimately our economy.

By patching up a system that is guaranteed to fail we go nowhere.

You need to take away banks ability to create money then boom and bust will be a thing of the past.

Somebody teach the banks, how banking works will you.

What do you think?

Leave a comment, tweet, like, share, just have an opinion it affects us all…

Simon Dixon

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