Regulation and the banking industry: reflections from Davos

If, like my school, you haven’t entered students for Unit 3 in January but are teaching both A2 units side-by-side for June examination, you might be looking for examples of competition policy and regulation to offer your students in the coming weeks. The report of the Independent Commission on Banking and the focus on regulation at last week’s Davos meeting are very well timed; this report filed today by Tim Weber of the BBC gives a neat summary of the time leading up to Lehman’s collapse, and offers a rather chilling conclusion from informal dinner-table discussions with the world’s top bankers that it is unlikely that regulators can, in practice, untangle the systemic risks in the financial system that make it imperative for government’s to step in and support failing banks.

If you would like to follow this up as an example with students, you might try some of the following links. There are numerous articles assessing the report of the ICB - just a couple are given here.

Banking regulation and Independent Commission on Banking – links
1. Q&A: Osborne’s financial regulation reforms

2. Q&A: Basel rules on bank capital - who cares?

3. Independent Commission on Banking - what’s it for?

4. The Independent Commission on Banking, set up by the government, is to set out the scope of its year-long inquiry into the banking sector. Adam Shaw explains how the commission will look into the issue of splitting up banks’ retail and investment operations. Radio report, 2.5 minutes

5. The issue of whether banks’ retail and investment operations should be split is to be looked at by a government inquiry into the banking sector. The reform is one of a number of options being considered by the Independent Commission on Banking. Critics have said that such a split could damage the UK’s competitive edge and make banks leave the UK. Video report by Hugh Pym, 2.5 minutes

6. Independent Commission on Banking website – terms of reference

7. Major reforms needed, says banking inquiry head

8. Banks must be allowed to fail, says Paul Tucker

9. UK’s Nationwide questions full bank split option