It is now 11 years since the global financial system teetered on the brink of collapse and governments were forced to intervene to prop up it up. These interventions took the form of government effectively guaranteeing all counterparty risk across the system. This secured the continuation of banks’ deposit taking and business and personal credit activities (i.e. their core banking business) but most of the risk guaranteed by governments arose from their speculative activity and this was also allowed to continue largely unchecked. Furthermore, the cost of this intervention by the subsequent Tory government in the UK, with the help of their supine Lib Dem collaborators, fell on the shoulders of UK workers and their families – the Tory strategy of ‘austerity’ that continues to this day. Meanwhile, following the feeble report by John Vickers in 2011 in which he ducked the opportunity to call for the complete separation of core banking from speculative trading, nothing has been done to reduce the risks being taken by banks “with other peoples’ money” as John Kay aptly described it [I] except for some further, over-complicated and ineffective regulation. Yet without fundamental changes to the ownership, conduct and activities of banks, and without bring the self-proclaimed ‘masters of the universe’ to account, another financial crisis is inescapable. The only question is when it will arrive.
The Communist University in South London (CUiSL) is sponsored by the Croydon Branch of the Communist Party which has good links with the Communist Party’s Economics Commission. We are currently exploring with both bodies the possibility of conducting a study of banking and banking crises and how the latter can be avoided in future. If you would like to be kept informed of progress and perhaps even participate in this work, please contact us at CommunistUniversity@communist-party.org.uk
[i] Other People’s Money – Masters of the Universe or Servants of the People? John Kay, Profile Books, 2015