Amendment of the law

I take the point. Glass-Steagall is not a solution by itself, but it simplifies one critical element of the system. It is critical no matter how big the banks are. I did a Harvard advanced management programme and, one day, our senior finance professor said something that shocked the entire class—that tax complexity was in our interest. We all asked what he was talking about. He replied that, every year, Wall street employs 300 people with master of business administration degrees from the top business schools—Wharton, Harvard, Stanford and so on—while the Internal Revenue Service employs one middle-ranking MBA from Penn Central. He asked whom we thought out of that group would win the arms race. He was talking about tax, but the same argument applies to regulation. We will always lose the battle over complex regulation, so one of the strategies that the Government should consider is simplifying regulation in those sectors that it is vital to control, whatever the size of the individual companies in it. After all, as somebody said earlier, 12,000 banks went down in America in the '30s. The other sector, however, has historically best been dealt with in America by anti-trust law—it is the "too big to fail, too big to bail" problem. There is a need for at least another international discussion, if not an agreement, about how big we let some of those financial institutions get. There is an argument for an anti-trust approach. The original anti-trust laws in America were a mixture of political and economic decisions to do with minimising the risk of having too big an individual player in the corporate sector, after the great robber barons who built the American railways and so on. If we understand our history properly, we have to think about what size of corporation we allow to have certain key plays within the system. The other problem that we have here is one of transparency. The point about Lehmans is that I do not think that the American Government understood the linkages to Lehmans, through the credit default swap and collateralised debt obligation structures, and so on. My throwaway line earlier about instruments that were supposed to reduce risk ending up concealing it is quite relevant in this context, because that is what happened. There were individual risk reductions that did not apply to the whole system. I apologise to the House for going into terrible complexity in answering the Minister's point, but that seems to me to be one component of dealing with the overall system. Another component is ensuring that the risk transmission mechanisms are transparent and also that no organisation is too big to bail. I will draw my remarks to a conclusion on that point. Even given my political interests, I hope that the Budget is a success, because there are too many millions of people out there whose lives depend on it. I am pessimistic, because it seems that we are not addressing the fundamentals at the core of our problem. I say "we" because the political class in total has deluded itself about the vitality of the City and so on. We have allowed the problem to happen. It is the Government's responsibility: it happened on their watch and they have to sort it. However, because of those collective delusions, they have not addressed the right issue. It is a sad day for Britain and I am afraid that the Government will fail.