Anthony Painter

I have just finished mopping my bran flakes off the carpet following an involuntary reaction to hearing George Osborne describe his financial reform package as ‘Obama style.’ Just to reassure myself that I hadn’t been hearing things, I took some time to listen the the entire Today interview once again (it’s was on at 8:10am) and read the reform package that the Shadow Chancellor announced in July.

Well, my reflexive response was not unjustified it turns out.

Here’s what President Obama said about splitting retail banking from proprietary trading etc:

“It’s for these reasons that I’m proposing a simple and common-sense reform, which we’re calling the Volcker Rule, after this tall guy behind me. Banks will no longer be allowed to own, invest or sponsor hedge funds, private equity funds or proprietary trading operations for their own profit unrelated to serving their customers.

If financial firms want to trade for profit, that’s something they’re free to do. Indeed, doing so responsibly is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.”

Notice that it is a clear set of proposals- not aspirations, hopes, something to be discussed, speculated about, agreed with other governments or the financial services industry. Of course, these proposals will have to travel through Congress. But the starting point is absolutely clear.

Now here is the Conservative policy (apparently George Osborne doesn’t really bother reading policy documents- keeps the public pronouncements guilt free and the body language in check I guess):

“We will empower the Bank of England to impose much higher capital requirements on high risk activities such as large scale proprietary trading carried out by banks that also take retail deposits. In practice this could [my italics] prevent banks that take retail deposits from engaging in many of these high-risk activities by making them more expensive. At the same time the Bank will examine the case for a more structural separation of these activities in international policy forums.”

So it’s not a separation proposal at all. It is about ‘empowering’ the Bank of England. It is contingent on international negotiations in a way that President Obama’s proposals are not. It may or may not happen. In fairness to George Osborne, Mervyn King is broadly in favour of these changes but these Conservative proposals will tie his hands.

Nonetheless, to go around saying that he believes in the type of separation proposed by President Obama is beyond disingenuous. And it’s beyond his party’s policy. Which, one has to suppose, is his policy too.

It also marks a trend in Conservative campaigning where they float aspirations and hopes as if they were policies in an attempt to deflect proper scrutiny. They may think that’s a clever approach but I guarantee it will make them look incredibly shifty in forthcoming campaign- just as George Osborne appeared this morning once Justin Webb got his teeth into the issue.

* Picture from the excellent Stuart King for Putney, Roehampton and Southfields website. (If I give him a credit, I’m hoping he won’t be stroppy with me for nicking it!)