Two out of five of us fear that our money isn’t safe in the bank on one survey out today. With HBOS taken over, Bradford and Bingley trying to keep its head above water, the financial turmoil is a huge consumer issue.
John Kay, FT columnist and inspirational economics professor, captures some of the mood in terms of the shift in thinking on economic policy when he just recently retold the story of the demutualisation of the Halifax. He was on the board at the time and £20 billion was paid out to 8 million members. But, John admits, they got it wrong. “We let them all down.”
In US debate at present, this is called the Glass-Steagall Act, which said banks are retail banks or financial speculators, but not both. The Act, from 1933, was a pioneering piece of consumer legislation, setting up full deposit insurance for savers if banks did go down. In the UK, twelve months on from Northern Rock, where is the full deposit protection beyond £35k that we were promised? If consumers now don’t trust that banks are safe, this is one stable door that needs to be shut.