Mark Littlewood writes for Public Finance

Today saw the release of the much-trailed report from the Independent Commission on Banking. Unfortunately it misses the main point.

Set up to look at reforming banking regulation in the UK, the Commission’s report should have been a blueprint for how a bank could fail and be wound up with minimal disruption to the wider economy and at no cost to the taxpayer.

It could have set out what various scenarios would look like and have provided an indication of who bares the risks. Instead it seems to have bypassed these crucial issues and instead focused on the distraction of ‘ring-fencing’.

It would be wonderful if such a move did make it clear there would be no more taxpayer bailouts, but it does not. Neither does putting a firewall between the retail and investment sections of a bank mean it is less likely to fail; if it did then, who knows, maybe some cautious banks would have already structured themselves this way. We certainly would not have seen Northern Rock decimated.

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