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Our ballooning national debt – is City AM the only paper worth reading?

This morning in City A.M., Editor Allister Heath writes once again about the lamentable failure of the political and media class properly to inform the public debate on our country’s finances. Referring to a poll asking whether the Coalition is cutting the national debt, keeping it the same or increasing it: These same questions were first asked at the beginning of the year by ComRes, last time on behalf of the Centre for Policy Studies. Depressingly, the public’s economic literacy […]

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The Government should now adopt my bill on bank accounting

Accounting seems so dreary but what if broken rules allow banks to show false profits, overstate capital and hide losses? What if the banks have paid bonuses out of unrealised gains? The Bill I introduced in March 2011 deals with just those problems. All the details are here. I learnt today that the Bank of England will make a statement on Thursday about bank balance sheets. I expect they will require assets to be written down and more capital to […]

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Bank on Dave – in Parliament tomorrow

Tomorrow in Parliament, I’m hosting a meeting with Dave Fishwick and MPs to discuss his struggle to start a local, responsible bank in touch with its savers and borrowers. The Channel 4 documentary is here and this Russia Today video gives an overview: The FSA have declined to attend but I’m hoping that MPs hearing from Dave will redouble efforts to persuade the Government to lower barriers to entry in banking. If you would like to ask your MP to […]

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Leverage and the Bank of England

In his speech yesterday, potential Governor of the Bank of England Paul Tucker discussed moral hazard, agency problems, short-termism and the “manifestly false” assumptions of risk models. I almost feel prophetic. He also said: When credit markets become overly exuberant, not only do the balance sheets of lenders become stretched, cheap credit leads borrowers to become over indebted, raising the probability of default. When defaults eventually pick up, a general awakening occurs, triggering mass deleveraging. So close to the monetary […]

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Bank’s risk management affected by IFRS accounting

Since I introduced a measure criticising IFRS accounting and requiring banks to prepare accounts to UK standards, there have been a stream of developments backing up my criticisms. The problem extends as far as Korea. Via bruegel.org: Korean firms’ business activities, such as risk management and foreign investment, have been affected by the obligation since 2011 to adopt International Financial Reporting Standards (IFRS). Korean banks may need to reshape their credit-rating models and enhance their loan-collection systems to prepare for […]

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The awful unspoken truth about QE

Via Conservative Home’s blog The Deep End, an interesting question about QE: If the Government is just going to print money, why can’t we have some? Of course, if you started to give the cash directly to the people, then they might finally understand that our entire economic system runs on funny money. And who knows what would happen then? Henry Ford is supposed to have answered their question: It is well enough that people of the nation do not understand […]

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David Fishwick, the Bank of Dave and the causes of the economic crisis

I first met David Fishwick on 15 March this year. He was interviewing a series of MPs for his Channel 4 documentary Bank of Dave: David Fishwick is so fed up with the way that the banks are treating people he’s decided to open his own tiny bank to serve his local community in Burnley and help the people the banks have turned down. Dave’s plan is to open an old fashioned bank and be a hands-on bank manager giving […]

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For The Spectator Coffee House – Why tolerate central banking?

“Did you encourage them to make up the made up thing to their own advantage?” That’s how one Twitter correspondent paraphrased a question to the Deputy Governor of the Bank.  The LIBOR scandal has exposed the institutions and culture of the City to popular scrutiny as never before.  The population is reacting with justified incredulity to the absurdity it is finding. Read the rest of my article here.

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The debate on Professional Standards in the Banking Industry

I can’t speak in the debate on professional standards in the banking industry today: I missed the opening speeches in order to help lead a conversation amongst colleagues on economic growth. As I listen to the debate from my office or in the Chamber, I realise my levels of optimism are highly dependent on who is speaking. On the one hand, I am discouraged by the sheer partisanship which has been reported in the speeches I missed. To understand the […]

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The banking inquiry: judges apply the law, MPs make it

On BBC News 24 at 3pm today, I was asked about the debate over whether to have a Parliamentary or a judge-led inquiry into banking. I made the point that judges apply the law and MPs make it. (In relation to banking, we are far beyond matters of judge-made common law.) Whereas Leveson is primarily about the law as it is, any inquiry into banking must look at the institutional framework which has allowed ordinary and predictable self interest to […]

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