What is socially useful work?

Topical opportunity for Adair Turner, Chairman of the FSA here in London to clarify his exacting standards with respect to what is or is not 'socially useful work': is sitting on a sofa and 'reading' the breakfast news socially useful work? This is the question we ask ourselves as the BBC's Adrian Chiles is signed by ITV for a reported £6million.

Glass Steagall is good for you!

We continue to be amazed by the hysteric reaction of bankers to the possible introduction of a separation of business lines along the regulations imposed by the defunct Glass-Steagall Act of 1932 that separated commercial and investment banking for more than sixty years in the USA. Looking at it from another perspective - and not just short term/short sighted business perspectives - was the global success and dominance of the US investment banks not partially due to this enforced separation? Would the enterprise spirit not have been severely dented by keeping the entrepreneurial spirit constrained by the bureaucratic management structures of the commercial banks? A similar argument could be made in case of the City of London where the free-wheeling spirit of the financial community goes back over centuries and is in stark contrast to the top-down models of the continental European banking industry.

Dick Fuld's Ignorance: argument for smaller Banks

When the former CEO of Lehman Brothers argues that he had no knowledge of the bank's use of an accounting gimmick to hide its deteriorating financial situation we may well give him the benefit of the doubt in the absence of a 'smoking gun' proving the opposite. But it also demonstrates that even managing a financial firm such as Lehman Brothers was beyond the capability of one manager. Lehman did not have all the other business units that the typical 'Universal' Bank has under its wings (Credit Card, Consumer loans, Corporate Banking to name a few) and it still was possible that the man in command - and given his length of tenure he had the ability to know the shop inside out - did not get involved in substantial transactions such as the regular Repo 105 transactions which involved billions in balance sheet exposure. The argument that breaking up banks into smaller units would harm the economy holds no water. Why should lending to industry, and in particular to middle-sized and smaller businesses be harmed if a bank can no longer play in - to pick just one example - the structured retail client product market in Germany?