Holyrood v Houdini Banking

Bankers-or-Us-a-Derivative-MessBanking’s corrupt and unassailable and there’s nothing we can do about it, right? On the day that its revealed the Cabinet minister Sajid David was among Deutsche bankers paid massive bonuses under a tax avoidance scam a new Scottish alternative for a sane banking system has been put forward.

Scotland’s banking system is “unsafe and unfit for purpose” and new “safe, sustainable, stakeholder” banks are needed, linked together through a government-owned network, a new report published today has argued. Robin McAlpine of the Common Weal added: “People think that banking is one of those issue where Scotland just has to sit around and hope that Westminster does something good – which it never does. We really want to get across the message that Scotland could create a really powerful, people-centred banking system within the powers it already has and that this could be a really big, really transformative project for a Scottish Government.”

Christine Berry, Senior Researcher at the New Economics Foundation reiterated the point:

“Despite the dangerous complacency guiding a return to business as usual in the City, we are nowhere near having fixed the problems with our banking system that led to the crisis of 2008. We’re still far too dependent on a small number of very large, very similar shareholder-owned banks with little interest in serving small businesses or rural communities, or in financing the transition to a low-carbon economy. Scotland doesn’t have to wait for Westminster to wake up to this: this report shows it has the power to lead the way in building a better system, learning from the best of our European neighbours.”

The report, ‘Banking for the Common Good’, comes as the danger of a new financial crisis has been heightened in recent months, with government-owned RBS – Scotland’s biggest bank – telling investors to “sell everything”, as its shares slumped to their lowest value in more than three years. The report is a collaboration between Friends of the Earth Scotland, the New Economics Foundation, the Common Weal and Move Your Money. It essentially shows with a stark clarity that Scotland’s banking sector is made up of a very small number of mega-banks that are failing in terms of services to customers and companies, and of investment in a sustainable and productive economy.

The authors put forward three key proposals that the Scottish Government could enact now, including:

  • a powerful Scottish National Investment Bank
  • locally-rooted ‘People’s Banks’
  • a publicly-owned interbank payment system

The report, authored by Gemma Bone, argues that the new banks could make the Scottish economy more resilient in the face of a future financial crisis by increasing “counter-cyclical spending”, as well as directing funding to “environmentally and socially useful projects”. The proposals draw on best practice internationally including the German ‘Sparkassen’ model and the Nordic Investment Bank. Gemma Bone said:

“The UK missed a big opportunity to reform the banking system after the crisis of 2008, and banking reform has since dropped off the agenda. We wrote this report to show that systemic reform of banking is both possible and desirable.
“It is pleasing to launch it in Edinburgh, a city with a long and varied history of financial innovation but this year we are calling on Scotland to take up a leading role once again to transform the banking system to better meet the pressing needs of the environment, businesses and society.“

Lesley Brennan,Labour MSP for North East of Scotland who is hosting the report launch at the Scottish Parliament this evening commented:

“Since the financial crises of 2008, taxpayers and consumers have been effectively paying the price for the breakdown of an unsustainable model of banking seen here in Scotland and across the world. Simply returning to yet another unsustainable top-heavy model with ‘light touch regulation’ cannot be an option going forward.”

Comments (17)

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  1. J Galt says:

    Yes but remember this (the UK) is the money laundering capital of the world – will they allow any bottom up reconstruction of the corruption which has served them well.

    The SG’s powers are limited to say the least and Westminster (Tory/Labour et al) will do exactly what it is told by the “City”- they always have done.

    Any moves would have be so far “under the radar” in order not to be strangled at birth that it is debatable whether it would be possible to do anything short of a monumental change in circumstances such as a complete economic collapse or War.

    Brown and Darling had as their task the sabotage of the Independent Scottish Banking sector in order to pre-emptively destroy the case for Scottish Independence. They did a splendid job for their Masters and have left a desert where the Scottish Financial sector used to be. A more perfect example of Traitors to their People you could not hope to find.

    1. bringiton says:

      Compleletely agree with you.
      The “UK” economy is based almost entirely on the fortunes of the City of London and the financial sector.
      Anything which threatens to undermine that position would not be tolerated by London but if we can promote local democracy through land ownership reform then we will have taken a big step towards wresting power away from them and our ability to do things differently.
      We need to break the mindset of centralised control of resources,whether it be in London or Edinburgh but starting with London because without that,nothing else will happen.

  2. Christie says:

    Never a truer word spoken. Since 2008 concentration of ownership and reliance on complex and abstract products has gotten worse, not better. The writing is well and truly on the wall, and the fan is indeed facing an unpleasant impact. What’s to stop us creating institutions which serve the interests of customers and communities instead of only shareholders and managers?

  3. LesRoches says:

    Excellent suggestion. I did propose, through my input to the SNP policy ideas, that a Scottish Treasury be considered. This would not just be essential for a currency solution in future and other major boxes yet to be ticked, but benefit the idea of a peoples bank under proper, transparent regulation.

    I am still waiting for a response.

  4. 1314 says:

    “The UK missed a big opportunity to reform the banking system after the crisis of 2008″

    No they didn’t – they deliberately avoided reforming the banking system.

  5. Ian Kirkwood says:

    One of the disguises adopted by the glue of society — the surplus ‘economic rent’ that must be shared for a civilisation to survive — is bank interest. If this thought can find a home at the basis of banking reforms, then there would be hope that Scotland’s broken social contract can be repaired.

  6. Ian Kirkwood says:

    iiiiiiiiiiii
    The letter ‘i’ appears to missing form all comments once processed by this message generator…

    1. It’s true. It’s a glitch. There is nothing we can do about it. Try to cope.

      1. bringiton says:

        An eye for an eye!

      2. David Sangster says:

        Opportunist strike to renew plea for an altogether better platform for comments, one with features such as upticks and edit facility. I know cash is tight, but could it not be crowd-funded or something? I’d be interested to know how it all works and how much it would cost for, say, the Facebook platform. Wee editorial, maybe?

  7. Crubag says:

    There’s no barrier to running small, local banks. We used to have lots, and there are still survivors, loke the Airdrie Savings Bank.

    The challenge is in persuading people to deposit their money with them.

    1. J Galt says:

      I thInk the challenge Is more how to protect any exIsting or new such banks from the fInancIal terrorIsts of the City of London and theIr paId scum in the UK Govt.

      The Scottish Govt certainly doesn’t have the power to protect them, and I’m afraid wIshful thinking won’t do It.

  8. Matt Seattle says:

    Try usIng upper case I as If you were lIvIng In the Early Days of a Better NatIon

  9. Alf Baird says:

    This idea would require ‘radical’ government. The SNP don’t do ‘radical’ anything. That gives Robin, Gemma et al. at least another 5 years to work on their idea.

  10. john young says:

    I don,t trust tho I vote for the SNP too many career politicians in their ranks,but I would say fcuk you London and go for it,we have been backtrackers for hundreds of years,time to show a bit of bottle and stop looking for bogeymen they are everywhere anyway.

  11. David Allan says:

    Time for a moratorIum on the use of “et al” , IrrItatIng and unnecessary .

    SaInsbury’s Bank serves me well. Covered by the Financial Services Compensation Scheme what more could you want. Nectar points etc. Who needs big banks.

    1. Alf Baird says:

      “et al” is quite a commonlu used and well understood abbreviation. Instead of “et al” would ‘and so on’ or ‘and so forth’ or ‘and the others’ be less irritating? “et al” is a little shorter, and “et al” is often preferred. Latin abbreviations such as “et al” are de facto used ad infinitum, by compos mentis individuals, in many professions as well as in day-to-day conversation.

      I am not sure why anyone should find “et al” “irritating”. Unless one is perhaps easily irritated.

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