The Archbishop of Canterbury warned on Monday night that Britain was mired in an economic depression and called for major steps to drag the country out of it, including the breakup of a major bank in order to create regional lenders.
So reports the Guardian this morning-it then goes on with a peon of praise for Labour who never thought of the idea in office and ignore those (chiefly Lib Dems) who urged them to do. This tells us more about the Guardian than it does about the state of politics.
The recent Lib Dem policy drawn up after a working party on which The Disgruntled radical and Prateek Buch both served advocated precisely that.
I have always favoured the route of breaking up one of the monolithic banks Gordon Brown allowed and which is now in state ownership. I would prefer that it was and handed it over to its customers- ie creating local mutual banks.
A recent publication puts the case:
There are three reasons for promoting mutual building societies: they are less prone than banks to pursue risky speculative activity; a mixed system produces a more stable financial sector; and a stronger mutual sector enhances competition within the financial system. The banking crisis highlighted the importance of retaining diverse models of financial service providers, and while mutuals were affected by the recession, they were not themselves responsible for causing the recession, as were private banks. The UK Government needs to secure a financial return for the failed financial institutions it nationalised and a low level of overall economic risk for the taxpayer. Given a trade-off, the long-run benefits of financial sustainability and reduced risk, plus enhanced competition, need to be given proper weighting compared with any short run gain through a trade sale and the repayment of the government's support.
One of the authors, Johnathon Michie, produced a report for Kellogg College Oxford showing how the bank could be mutualised and the government's investment repaid over an agreed period.This has always appealed to me as the last thing we need is another plc owned bank whose sole objective is to 'build shareholder value'. We need institutions who long term objectives is serving those who save and borrow from them and to who they are responsible.
It is interesting that the most recent figures I have seen should that a small mutual Building Society, The Furness, leant more to homeowners and businesses that Lloyds!
Anyway the Archbishop is to be applauded for his contribution as he says:
Problems were created when banks became distant from the communities they served, he said. "At least part of the banking system should be local".