Financial Services Bill

Even if some parts of the Bill are eventually washed in, rather than washed out, the possibility that this clause will appear on the statute book before the election is absolutely nil. Perhaps the Minister will let us know whether he disagrees with that view. If so, we can take an appropriate bet on the proceeds, in the spirit of general financial participation. Be that as it may. Although it may seem pointless debating this matter, given that it is not likely to reach the statute book, there is a case for debating the points raised by my noble friend in moving his amendment. I am among those who did not speak at Second Reading. I think we should put a limit on how many times a week one speaks in your Lordships' House. None the less, I am glad to have an opportunity to take up the points which my noble friend made with regard to Glass-Steagall and to the phrase "too big to fail". Of course, the two are related. In the Second Reading debate, my noble friend Lord Lawson set out all the arguments in favour of Glass-Steagall and he came down strongly in favour of some such replication in our system in the UK for the future. In reply, the Minister said that he was not persuaded by my noble friend Lord Lawson but that if he were to be persuaded by anyone, it would be my noble friend. The case put by my noble friend is very strong indeed on the question of dividing the less risky part of our banking system from the very risky part. These matters were put forward in a remarkable article by Mr Paul Volcker in the New York Times on 31 January and it is very important that people read it. He deals with the matter of being too big to fail. He says: ""The phrase ‘too big to fail’ has entered into our everyday vocabulary. It carries the implication that really large, complex and highly interconnected financial institutions can count on public support at critical times. The sense of public outrage over seemingly unfair treatment is palpable. Beyond the emotion, the result is to provide those institutions with a competitive advantage in their financing, in their size and in their ability to take and absorb risks"." He then comes up with some specific proposals about how the problem might be dealt with in regard to those banks which are thought to be too big to fail. Quite apart from the usual provisions and suggestions with regard to liquidity ratios and so on, he makes the point that perhaps one should have some form of a new resolution authority—he suggests it should be international, so it is relevant to today’s debate—which would wind up in an orderly manner banks that were too big to fail. That is certainly worth considering in the international negotiations that are taking place. There are some important issues with which the next Government, of whatever party, will need to deal. But they are not dealt with at all in this Bill unless perhaps it is possible for the co-ordinating committee in some way to implement Glass-Stegall without relying on legislation. That does not seem very likely. These are far more important issues in many ways than the structure that we are considering with regard to regulation. It is helpful that my noble friend has raised these matters this afternoon.