Bankers kick back in Davos whilst Parliament debates action on extortionate lending
Reports from the World Economic Forum in Davos were full of stories of leading bankers, at various points; schmoozing G20 leaders, talking tough and pleading for forgiveness for the pain they have caused economies around the world. Okay, maybe this last one might be made up...
Channel 4's economics correspondent, Faisal Islam, reported on twitter that ‘those in the know' were saying that Project Merlin was ‘a sham'. http://twitter.com/faisalislam/status/30643061000241152#
Project Merlin is the codename for the secret talks that the banks have been holding with the government to negotiate an end to ‘bank bashing' - ie taxes, break-up of investment and retail banks and further regulation - in return for more lending to small businesses and investment in the Big Society Bank. I have blogged previously http://www.urbanforum.org.uk/better-banking-blog/transparency-hides-a-multitude-of-sins on my grave concern about the government doing deals behind closed doors, particularly if this meant giving the banks a free rein in return for fairly modest amounts.
Where this leaves us, I'm not too sure. The government still has to find a way to adequately capitalise the Big Society bank, and will also need to decide whether it has the appetite to reform banking. There have been rumours circulating that Osborne and Cameron have been blocking any attempts to restrict the activities of the banks. Even if this were true (and I obviously have no idea whether it is or not), there is growing public unease at the gulf between the huge profits banks are posting (and more particularly the bonuses they are paying out) and the cuts to public spending. It would undoubtedly be a very popular move to take action against the banks. The recent speech from the Chair of the Independent Banking Commission http://bankingcommission.independent.gov.uk/bankingcommission/wp-content/uploads/2011/01/John-Vickers-220111.pdf will no doubt be pored over by Treasury officials advising Ministers on plotting the way forward for banking.
Meanwhile on the other side of Gotham City...
In Parliament, the Consumer Credit (regulation and advice) Bill has been making steady progress. The 10 Minute Bill, proposed by Stella Creasy MP http://www.workingforwalthamstow.org/2010/10/press-release-mp-introduces-bi.html would limit the amount that lenders could charge for a loan. This would cap the extortionate amounts that payday lenders and doorstep lenders can charge poor people who are generally excluded from mainstream banking - something we have long been campaigning for http://www.urbanforum.org.uk/better-banking-blog/how-can-60-interest-for-a-credit-card-be-too-high-but-60000-is-okay
The Bill was presented and then granted a second reading, which will take place on Thursday 3rd February - and it's not too late to get in touch with your MP to ask them to support the Bill. Stella has information on how to do this, including a model letter on her website http://www.workingforwalthamstow.org/2011/01/capping_the_cost_of_credit_ple.html
Encouraging the Bill now has cross-Party support and is being proposed jointly with Conservative MP Justin Tomlinson. Let us hope that Government Whips do not try to derail it by reverting to tired political point scoring.
I was pleased to hear from my MP, Mike Freer (the former leader of Barnet's ‘easyjet council') within a matter of minutes in response to expression of support for the Bill. [NB I have to say I was very impressed with the speed of his reply...by far the quickest I have ever had from my constituency MP!] He said simply:
Dear Mr Blume
I shall be attending the debate. Justin Tomlinson is a good friend and so I am inclined to support the motion.
Mike Freer MP
Finchley and Golders Green
sent via blackberry
He has obviously left himself a little bit of wriggle room with that wording, but I shall be watching closely and I hope that Mike and his colleagues on the government benches will take action on the exploitation of poor people.