Former IMF chief economist, Simon Johnson continues to be an outspoken critic of the coziness between the financial sector and the government, especially in the United States. Johnson worries that regulatory agencies enable the same behavior that has cost the global economy trilions of dollars.
FBI estimates that street crimes like burglary and robbery costs the nation $3.8 billion a year. Corporate crimes, on the other hand and high risk banking activity cost hundreds of billions each year. Banks continue to want to externalize their risk and in the UK where a new commission seeks to protect the public from every having to bailout banks for bad management, banks are threatening to move.
A government commission is to unveil measures aimed at ensuring taxpayers will never again need to bail out Britain’s banks, with recommendations that risk splitting the coalition and infuriating the banking sector.
Amid warnings from large banks such as Barclays, HSBC and Standard Chartered that they will leave London if the proposals by Sir John Vickers are too radical, the commission will seek to ringfence savers from riskier banking operations.
The commission has considered the potential impact of its proposals on the City and is expected to counter suggestions that they would encourage banks to move to New York or Hong Kong.
