Chapter 12: Conclusion: a cooperative counter-narrative
There are several prescriptions for putting right a banking system that has proved itself unfit for purpose. After the banking crisis of 2008, the first thing the regulators did was to tighten their rules so that banks have to hold more capital to cover potential losses. There were calls to break up the big banks described as ‘too big to fail’ and to separate out investment banking from commercial and retail banking, but these have stalled against resistance from the banks. After bankers began to divert public bailout money into massive bonuses, there were calls to change the incentive structure so that they would only be rewarded for longer-term success. As Vince Cable put it, ‘Bank managers would be incentivised to be reliable, predictable and boring’ (2010, p. 193). This is being done and the bankers’ behaviour is changing as a result, though not as much as the public would like. Another round of bank failures and bailouts within the European Union led to a plan to allow banks to fail in the future; the costs would fall on equity and bondholders rather than on taxpayers, and an explicit resolution regime would make the process orderly and predictable. A new tax on banking transactions is proposed that will recoup some of the losses to the taxpayer and build up a fund against future losses. Alternatively, an insurance scheme would do the same job by creating a rescue fund (Llewellyn, 2010).
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.