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Turning back the clock to ‘Hovis banking’

The suggestion that we might partially turn back the clock has been described as a call for “Hovis banking”, referring to an advertisement that plays on nostalgia. The commercial succeeds because we believe the bread our grandparents ate, before innovations in technology and marketing, was nicer and more wholesome. Perhaps that is true in banking as in baking.

Don’t blame luck when your models misfire

We will succeed in managing financial risk better only when we come to recognise the limitations of formal modelling. Control of risk is almost entirely a matter of management competence, well-crafted incentives, robust structures and systems, and simplicity and transparency of design.

Middle England should spare a thought for Modigliani-Miller

The value of Modigliani-Miller – like any good model in physics or economics – lies as much in the questions it raises as in the truths it reveals.

Love the bearer of bad news

No one loves the bearer of bad news. But short sellers, Wikileaks, accountants who mark to market, and even rating agencies, should be applauded for telling people the news they do not want to hear.

Capitalism 4.0 – Anatole Kaletsky

Capitalism 1 was a world of laisser faire. This concept dominated economics and economic policy from The Wealth of Nations to the Great Depression....

Finance spread its own risks but left ours alone

The risks that the financial sector has devised techniques to manage are not the everyday risks of an uncertain world: they are risks almost entirely created within the financial sector itself.

The need for structural reform in banking

While there may be some economies of scope in the provision of financial services, they don't in any event compare in order of magnitude with the collateral economic damage imposed by recent failures in the financial sector.

Sir John Vickers will hear a lot of tosh on separation...

The Independent Commission on Banking headed by Sir John Vickers which the coalition Government has established will be told that such a separation between utility and casino can't be done – although it was done in Britain for most of the 20th century.

We should all have a say in how banks are reformed

More competition and a reduction of the conflicts of interest between different financial services activities is the antidote to gouging. The separation of retail and investment banking would begin a move away from the transaction-focused, sales-driven culture of recent years and reassert the development of long-term relationships with customers.

Bankers can’t blame the UK housing market

It was not British housebuyers who took on debts they could not repay in the recent boom: it was British banks.