Last week the Financial Conduct Authority proposed as its contribution to solving the housing crisis to “look at the products and markets that are developing to ensure they work for consumers.” This week it was the turn of the Bank of England’s Financial Stability Committee to address the housing crisis. They were, however, no more concerned about the housing needs of working families than were the Financial Conduct Authority. Their concern was with “wider financial stability” which they saw threatened by bank lending to the buy-to-let market. “Wider financial stability” is banker-speak for avoiding another banking crisis. Fuelled by Quantitative Easing, the policy whereby the government prints money and gives it to the banks in the hope that they will lend it to UK industry, the banks chose, instead, to increase lending for buy-to-let by 40% since the 2007-8 banking crash and bailout. This increase has been a major factor in escalating house prices. The Financial Stability Committee is right to be concerned that another banking crisis could be triggered by a collapse in the buy-to-let market, but just like the Financial Conduct Authority, they are focussing on the wrong needs: those of banks and financial services providers, not the unmet needs of working families.
Needless to say, the Financial Stability Committee refrained from suggesting that the government should regulate or restrict bank lending even though it is effectively with our money. The role of a regulator in a market economy is to bestow legitimacy on markets and the accumulation of capital. Protection of ‘consumers’ is very much a secondary consideration and protection of workers completely out of the question. Appointed by ministers but supposedly at arm’s length from the government of the day, their true independence is as fictitious as that of the judiciary and the police. We should not be surprised when they represent the interests of the 1%, not the 99%.
It is reported this week that if the Co-op Board does not accept the proposals from Lord Myners to ‘reform’ their structure to make it look more acceptable to ‘the City’, the Co-op’s principal lenders, Barclays, Lloyds Bank and Royal Bank of Scotland will flex their muscles and insist on the ‘reforms’ or call in their debts.
Hang on a moment. Barclays? Lloyds? RBS? Lord Myners??? Has the world gone completely mad?
The capitalist world is, of course, full of such contradictions, but in this case the lunatics appear to have taken over the asylum! Lord Myners originally attracted modest public attention as a financial journalist on the Daily Torygraph before rising to prominence as the Chairman of Marks and Spencer, where his ‘reforms’ clearly failed to reverse the painful, protracted decline of this once dominant and celebrated high street retailer. In 2008, he was appointed by Gordon Brown Financial Secretary to the Treasury where he oversaw the shawing up of …Barclays, Lloyds and RBS. The consequences of these bailouts resulted in the recession and the coalition government’s continuing efforts, with Labour’s endorsement, to make ordinary working people pay for the resulting economic crisis. The once in a lifetime opportunity to rein in the banks and make them serve the interests of their customers (rather than fleecing them) and the nation (by financing real businesses, not speculators) was thrown away. In the specific case of RBS, Myner’s judgment has proved particularly deficient. The parliamentary Treasury Committee reported in 2009 that “The RBS Board had shown itself to be incompetent in the management of the bank, steering it towards catastrophe… We suspect that Lord Myners’ City background, and naiveté as to the public perception of these matters, may have led him to place too much trust in an RBS Board that he himself described to us as “distinguished”.
Such are the individuals and businesses that now seek to dilute the democratic structures of the Co-op. The Communist Party in Croydon wishes the Co-op well in its struggle to keep its independence and we give our full support to our elected representatives from Croydon in this fight.