Now, I'm not so sure that the idea of HM Government running a large chunk of the UK banking system is such a bad idea. Think of it as a return to the old mixed economy, but with a different idea of what the commanding heights of the economy are. Rather than the state owning utilities and railways under this model, (though there's an idea now I mention it - not sure that pissing off that awful old Trot Bob Crow is a good reason to keep the current totally fucked railway arrangement) the state owns big chunks of banks. Why? Well, here is St Andrew of Wishful Thinking's own plan, if the Treasury would just like to give me a call...
1. The Bank has a role to moderate the economic cycle. Owning a huge chunk of the capacity to lend would be a great way to counter act the natural cycle of capitalism, that is the tendency of the current system to lend too much during bubbles and not enough during downturns, making both worse. HM Royal Bank of Sod-Off-Alan-Greenspan could help balance that
2. The new Bank would play a long term support role for UK Manufacturing. I don't mean a cossetting role here, that insulates companies so when the cull comes it's worse (a la British Leyland) but a bank who's job it is to nurture, grow and support the actual, real, wealth generating economy. The idea is to support good business that might be having a few bad quarters. It won't be easy to find the line between sensible support and market distorting, unsustainable lending, but banks are full of smart people. They'll find it. Incidentally, this idea is supported by that notorious hippy journal, the Financial Times.
3. Support for strategic investments for the UK. I'm thinking of things like renewable energy, fuel cells, carbon capture, coastal defence, nanotechnology. I'm sure you could add to the list. Crucially, these are areas which we expect to make money - which is why we want a Bank to back them, not HMG directly - but they might not make money for years. In other words, the market won't solve these problems unless its given a hell of a shove. Enter the Royal Bank of Shoving.
4. Get shut of banking assets outside the UK that don't support the core mission. So, in terms of the 'City' bits, keep financing, payments and risk management, but bollocks to an Indian or US Branch network. These assets don't matter to the UK taxpayer, so sell them to an organisation that will grow them.
5. Some banking products are downright usurious and vile. I'm thinking of store cards at 25% APR. Undercut them. Make it easy - like three clicks easy - to move your debts to the Royal Bank of Support People. This is no soft option, if you as a customer take the piss then its curtains for you, but this could form part of a programme of proper financial and, hell, even counselling support to get people back on the straight and narrow
6. Finally, act as a bank for rural, isolated or deprived areas that the commercial banks can't justify putting a branch in. This includes shitty bits of the UK, where a branch designed to help rebuild the area might help.
The key point with all of this, is that the New Bank would still be a commercial organisation, run by the same hard nosed commercial bastards it is now, but rather than just focusing on making money, it would have a grander mission. In The Corporation, Joel Bakan argues that if a person acted like a business in focusing on the acquisition of money and never mind the consequences, we'd call them a psychopath and lock them up. (Read the book, by the way, its brilliant). What I'm advocating here is a corporation with a sense of its wider responsibilities as a citizen. It still has to make money, but that's not all it should do. Capitalism with a human face if you like.
And to all those who say that its not the business of Governments to run banks and that the market always knows best: look around. We tried that, and it really, really didn't work.
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