Banking Reform

Lord Rees-Mogg Excerpts

Thursday 14th June 2012 Lords Chamber

[Lord Sassoon]

I am grateful—

[Lord Rees-Mogg]

My Lords—

[Lord Sassoon]

Perhaps I might answer my noble friend first. I am grateful to her for welcoming these next steps as we implement Vickers. On the questions about timetabling, we are firm not only on implementation by 2019 but on sticking to our commitment to completing the passage of the legislation in this Parliament, which allows for time for pre-legislative scrutiny this autumn and a proper and full process. On her point about whether we have thought about the read-across to the Financial Services Bill, we have done so—for example, we have picked up the Vickers recommendation about the FCA having a competition objective, and that is already drafted in the Financial Services Bill. There will be other important elements, such as account-switching, that will come in from September 2013. Everything fits together. I appreciate her recognition that a more diverse banking sector has also been thought about; it is a very important element of this.

--- Later in debate ---

[Lord Rees-Mogg]

My Lords—

[Baroness Northover]

My Lords, to be fair, it is actually the turn of the Labour Benches. If they are happy, then we will hear from the Cross Benches first before hearing from the Labour Benches. I think that the noble Lords have given way.

[Lord Rees-Mogg]

We were just brewing up to have a very satisfactory little argument about the Glass-Steagall Act. The important thing about it is how long it lasted; it was passed by the Senate in the 1930s and ultimately repealed by President Carter, who had been persuaded to do so by Wall Street. Its great virtue was that it identified more clearly than previous legislation, and more clearly than most subsequent legislation, the difference between retail bankers and what you could call casino bankers, and put different responsibilities on them. That protection worked. If one went, as I did, to Wall Street in the 1950s, one found that Wall Street had come to the conclusion that it was not going to have another slump, primarily because of that Act but also because of the wartime Bretton Woods agreement, which was masterminded by our very own Maynard Keynes. This is a consistent fruit. The set of ideas that were developed in response to the crisis of the early 1930s worked their way through the financial body and the intellectual body, and gave us what we are now looking for—a restabilisation of our own economy in its own terms.

[Lord Sassoon]

The noble Lord, Lord Rees-Mogg, of course speaks with great authority on these matters. All I do is to say that I listen with great interest to his historical analysis.