I have just been watching Bob Diamond of Barclays Bank being grilled by a committee in Parliament and a thought occurred to me. The Government wants to split up the banks into High Street Banks on the one side, and the Investment arms on the other.
I don’t think that it is appropriate for the Government to dictate to private enterprise like this. However, there is a way in which they can “nudge” the banks into doing what they want and this way would be so easy and simple to do.
The Government guarantee peoples savings up to, I believe, £50,000, if saved in a bank in Britain. All the government needs to do is to withdraw the blanket guarantee and renew the guarantee with a small proviso. This is that they will only guarantee savings in a high street bank that doesn’t have an investment arm. Then people could remove their money from certain banks and move it to banks or building societies who don’t have an investment arm, but only if they want their savings guaranteed.