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Speech on the Financial Institutions (Reform) Bill

I was delighted today that my ten-minute rule Bill was introduced without opposition. This late in the Parliament, the Bill itself is extremely unlikely to make further progress but I was glad to put the following on the record (these are my notes – Hansard is here: Mr Speaker, I beg to move that leave be given to bring in a Bill to enforce strict liability on directors of financial institutions; to require directors of financial institutions to post personal […]

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Financial Institutions (Reform) Bill – Other measures

In previous articles, I set out why it’s necessary to address risk-taking incentives in banks and how losses would be covered from the bonus pool and director’s personal bonds before hitting equity. This article sets out other necessary provisions. 5. Accounting standards 5.1 For the purposes of the Bill, all relevant figures (measures of profit, loss, capital, bonuses, personal bonds posted, etc.) would be obtained using parallel prudent accounting rules i.e. UK GAAP under Companies Act legislation. This was proposed in […]

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Financial Institutions (Reform) Bill – Use of personal bonds and bonus pool to make good bank losses

Yesterday, I began to set out how my proposed Financial Institutions (Reform) Bill would meet the need for a vibrant, reliable and robust banking system by adjusting bank directors’ and employees’ exposure to commercial risk. That article described changes to bank directors’ liability and the treatment of bonuses. This article explains how losses would be made good and defines core capital. 3. Use of personal bonds and bonus pool to make good bank losses 3.1 Should a bank report losses […]

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Financial Institutions (Reform) Bill – Liability of bankers and treatment of bonuses

A developed society like ours needs a good means of exchange, unit of account and store of value: a good money. It also needs a vibrant, dynamic, reliable and robust means of executing payments and intermediating savings to entrepreneurs: we need a good banking system. Unfortunately, Of all the many ways of organising banking, the worst is the one we have today. And I agree with the Governor of the Bank of England. He said elsewhere in that speech, “At the […]

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The BoE’s Andrew Haldane: “The best proposals for [bank] reform are those which aim to reshape risk-taking incentives on a durable basis”

While preparing to seek permission to introduce my Financial Institutions (Reform) Bill, I discovered a recent article by the Bank of England’s Executive Director for Financial Stability, Andrew Haldane, The Doom Loop: Equity in Banking: The continuing backlash against banking, as evidenced in popular protests on Wall Street and in the City of London, is a response not just to the fact that the world is poorer, as pre-crisis riches have turned to rags, but to the way these riches were privatised, […]

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Simon Jenkins: Swine flu? A panic stoked in order to posture and spend | Comment is free | The Guardian

Interesting comment at the Guardian, but people are taking this very seriously: We appear to have lost all ability to judge risk. The cause may lie in the national curriculum, the decline of “news” or the rise of blogs and concomitant, unmediated hysteria, but people seem helpless in navigating the gulf that separates public information from their daily round. They cannot set a statistic in context. They cannot relate bad news from Mexico to the risk that inevitably surrounds their […]

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Why skydive?

Someone suggested to me that the reason for skydiving is the thrill of the risk to life. Um, no, not quite. It is because, for about a minute, the skydiver is at liberty in the sky without an aeroplane. It is because skydiving is an exercise in personal responsibility, for yourself and for your friends. Ultimately, it is for the reason Mark so eloquently explains in this video, as he comes out of freefall at a good safe height of […]

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Wg Cdr Andy Green: “Is life with zero risk interesting? No.”

A team of British engineers is aiming to break the 1,000mph (1,610km/h) barrier on wheels for the first time. Wing Commander Andy Green, who broke the land speed record in 1997, talks about why he wants to go even faster as the driver of Bloodhound. Watch the video here. I served at RAF Leeming with Andy in 1994: it’s great to see a fighter pilot setting out to inspire engineers.

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