The Observer says that those respponsible for the banking crisis must be called to account. OK, let\’s do that then.
Consensus is already emerging around the need for stricter capital requirements, so banks would be obliged to hold money back in good times to avoid cash droughts in bad times.
I\’ve a thought rolling around the back of my head….and I\’d be very grateful if someone with a little more knowledge could confirm this to me.
Some years back Gordon Brown changed the tax treatment of the way that banks provisioned for future losses. Well, I\’m pretty sure that he did. The effect of the change was to make it more expensive for banks to hold money back in hte good tijmes against potential future losses. So, of course, they held less back.
Anyone able to point to chapter and verse on this?