Independent Commission on Banking

Baroness Kramer Excerpts

Monday 28th February 2011 Lords Chamber

Asked By

[Baroness Kramer]

To ask Her Majesty’s Government what assessment they have made of the progress of the Independent Commission on Banking.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government set up the Independent Commission on Banking to consider reforms to the banking sector. We welcome the progress that the commission has made and look forward to receiving its report in September.

[Baroness Kramer]

Does my noble friend agree that strengthened regulation supervision and stronger capital requirements are welcome but that neither of them deals with the underlying structural problems of “too big to fail” or “too interconnected to fail”? Will he commit the Government to act on any recommendations from the ICB for reform in this area, even if it means splitting the banks or ring-fencing activities with functional subsidiarity?

[Lord Sassoon]

I certainly agree with my noble friend that there were two areas that the Government needed to address urgently resulting from the failure of the previous system of regulation and the over-leveraging of our banks. The first one on which we have brought forward proposals is the system of regulation, although I completely agree with my noble friend that that is not sufficient, which is why we set up the independent commission to look into the structure of banking. I am certainly not going to pre-empt either the conclusions that it comes to in its final report or the Government’s response, but I am greatly encouraged by the papers that it put out and by the recent lecture by Sir John Vickers, which indicate that the commission is tackling all the major issues and stimulating a vigorous debate.