Separating investment and high street banks

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cliffski
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Separating investment and high street banks

Postby cliffski » Sat Jan 03, 2009 8:52 pm

I found this interesting:
http://www3.u.tv/BusinessNews/index.asp ... 03/01/2009

Vince Cable, the Liberal Democrat Treasury spokesman, has proposed a long-term reform of British banking so that a firewall is built between domestic banking and riskier internationally traded services.

In an interview with the Fabian Review Cable says: "In the longer term the banking sector is going to have to be reconstructed on very different lines. I don't think it's going to be possible to have high street banks that are simultaneously operating like casino-type investment banks."


I think this is a good point. There is a huge conflict of interests between the average saver who puts a few thousand pounds or dollars in a savings account for a rainy day, who wants security of their cash as a major priority, and the attitudes taken by the investment banks, with highly ss;eculative investments, usually overseas, and in complex financial instruments that are totally removed from how people *think* their savings are being invested.
Is he right? or is this a knee-jerk reaction to the a few bad decisions by a few crazy fund managers?
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Re: Separating investment and high street banks

Postby Josef Litobarski » Tue Jan 06, 2009 11:16 am

The US did something like this during the Great Depression in 1933 with the Glass-Steagall Act, seperating commercial banks from investment banks, but the act was weakened in the 80s and then finally repealed in 1999. The main argument for repealing the act seems to have been that US banks were losing their competitive edge, especially against foreign banks which didn't have these regulations.

Something like a Glass-Steagall Act for the UK would probably only be possible, though, if it were not just the UK enacting it, but if the major world governments met and all agreed to seperate their banks along the same lines.
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Re: Separating investment and high street banks

Postby cliffski » Wed Jan 07, 2009 9:09 am

Interesting. I wonder if there will be pressure to reinstate the act in the US now?
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Re: Separating investment and high street banks

Postby rboni » Thu Jan 08, 2009 12:53 am

One of the interesting facts about the financial crisis here in Australia is that genuine building societies and credit unions have become extremely popular due to their conservative banking practices.
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Re: Separating investment and high street banks

Postby cliffski » Thu Jan 08, 2009 9:12 am

Unfortunately all our building societies wanted to be banks, there really aren't any places that are safer here except those banks now taken over by the government :(
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Re: Separating investment and high street banks

Postby pigsnoutman » Sat Jan 10, 2009 1:01 pm

cliffski wrote:Unfortunately all our building societies wanted to be banks, there really aren't any places that are safer here except those banks now taken over by the government :(

(Vaguely) on the plus side, most of the building societies turned banks haven't faired well. Northen rock/bradford and bingly/halifax are now government or resued by other banks. Hopefully, this will deture any want-to-be-banks, and the building societies will become the safe option.
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Re: Separating investment and high street banks

Postby stock-investment » Fri Dec 25, 2009 12:23 pm

hope the things improve by next year and we get a sigh of relief

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