Bit hard for Ed though, I mean the stuff that’s just come out took place when Labour were last in power.As has been pointed out on other blogs, Gordon Brown was actively encouraging the bankers – just look at his Mansion House speech on 20th June 2007 just before the Northern Rock debacle.

Over the ten years I have had the privilege of addressing you as chancellor, I have been able year by year to record how The City of London has risen by your efforts, ingenuity and creativity to become a new world leader . . . an era that history will record as the beginning of a new golden age for the City of London. . . . Britain needs more of the vigour, ingenuity and aspiration that you already demonstrate that is the hallmark of your success”

Does that look like encouragement, or does that look like encouragement? I mean, really Gordon used to play the same sorts of games that the bloody bankers played… shifting things around, hiding things in the small print, making everything as opaque as possible rather than being straightforward. Remember the scrapping of the 10p rate being portrayed as a tax cut? I do – it hit me!

Yes, bankers are vermin, but the idea that their mates can somehow portray themselves as saviours is laughable.

@OP, Sunny: “We still haven’t had an inquiry into what caused the crash…”

But we have had lots of press speculation. It was something that happened in the world of international finance. It may not have been something that UK bankers did but something that occurred in the cloud of international transactions. All UK bankers were damaged as a consequence.

We may inquire, but will our thoughts change the world of international finance?

Rewrite the question so that is about the conduct of UK banks. What were the risks of UK banks and why did they expose customers in that way? How were they permitted? Note that when “customers are exposed”, I understand that it is a taxpayer problem to pay customers.

I’ve never thought of the financial/banking crisis as ‘corporate welfare’ before – but I do now! Hubby and I have been declined a loan to buy a new car. Reason? We’ve have such an excellent credit rating (experian say so) we have a warning against our names to say we could potentially borrow a lot of money from lots of places. In effect anyone would lend us money so don’t lend us money in case we borrow too much!

So this all happened between 2006 and 2009 when who was in power and regulating the system? Why would it be an advantage to Ed Milliband to try to go into more detail about it? Surely the answer is appropriate regulation, not more regulation?

This happened under Labour’s watch amid a financial system set up and feted by the Tories.

Imagine the Tory screeching had new Labour after 1997 clamped down on high finance in the kind of way which was necessary!

And remind me. Between 2006 and 2008 what was John Redwoods job description again?

So Tories whining that Labour can’t say anything because it happened on Labours watch are in for the kind of shock justine Greening got on Question Time on Thurs.

The blame-the-last-government-for-everything tactic is no longer washing with the public.

This is a Toru crisis they’re wholly incapable of dealing with.

5. BenM

That seems a very aggressive response to a warning to Ed Milliband that he would be unlikely to be able to score political points as the Tories were not making the rules at the time.

Between 2006 and 2008 John Redwood (remind me how important he is please) was a member of the opposition party in the House of Commons.

Should a government take responsibility for events which happened before they were elected? My view is no, but some might think differently.

Thats right JC the financial system and culture was set up and feted by the Tories.

The Tory problems with this crisis are exacerbated every time Cameron goes to an EU summit and wields a veto “defending” the financial services industry from a much needed FTT.

Which is great.

As long as Cameron does that there is no mileage in the it’s-all-labours-fault line. The public are incredulous at such Tory whining.

Who says it’s ONLY Labours fault? Not me – all the buggers are up to their necks in it. We all know that the Tories stink, the question is whether Milliband can make political capital out of this. I maintain that it’s pretty hard to shout “Look mummy, that man’s smelly” when you’re covered in pig shit yourself.

On the other hand though, there may be a good reason why the Barclays bank scandal should be ignored by everyone – Milliband, Cameron, FSO, etc.

It seems that the US are considering extraditing some of the Barclays top bods to face trial over there for interest rate fixing.

This has got to be good news. At the worst, they’d end up doing six months over here – served in an open prison a la Jeffrey Archer or Neil Hamilton – followed by a series of celebrity interviews and well paid appearences on some crap BBC reality TV show.

Over there, they’ll be more likely to get 99 years wearing shackles and dressed in orange boiler suits in some federal prison – I reckon that’s more appropriate.

hmm there might also be good reason why he might only be playing at this and U turn if elected to office.

I agree – Ed Miliband must make it clear to the electorate that he is reforming banking industry, not as part of some ideological crusade, but because it is right – they are no longer working in our interests, but in their own interest. (I’m not sure of the analogy, but, there is some similarities between this and the argument used by the right to reform the Trade Union movement in the 1980′s)

And the reform process must start with a criminal investigation into Barclays (and others) because, it is clear that there is prima facie a fraud committed here.

I expand on this: http://www.allthatsleft.co.uk/2012/06/bankers-bonuses-greed-fraud/

@Ben M

The problem is that the government that was incumbent at the time has to take the lion’s share of the criticism, regardless of what the opposition might or might not have done.

Labour lived off Tory economic incompetence for fifteen years following Black Wednesday and being forced out of the ERM, despite Gordon Brown being an even greater advocate of ERM membership than any Tory.

Any banking inquiry (and I welcome one) will (I think) show things got progressively worse since the 1986 Big Bang but that with better regulation (better doesn’t equal more) the 2007/08 banking crisis wasn’t inevitable.

I don’t think anyone particular wants to go back to the financial services we had pre-1980s reforms – limits on taking money out of country (no holiday home in Spain), expensive and rationed mortgages, no ISAs, no SIPPS etc.

@Ben M

The problem is that the government that was incumbent at the time has to take the lion’s share of the criticism, regardless of what the opposition might or might not have done.

Labour lived off Tory economic incompetence for fifteen years following Black Wednesday and being forced out of the ERM, despite Gordon Brown being an even greater advocate of ERM membership than any Tory.

Any banking inquiry (and I welcome one) will (I think) show things got progressively worse since the 1986 Big Bang but that with better regulation (better doesn’t equal more) the 2007/08 banking crisis wasn’t inevitable.

Shinsei1967 is correct that John Smith and Gordon Brown supported UK membership of the ERM, which is interesting in itself. The only reason to join the ERM was to prepare the way for eventual euro membership. In a counterfactual history world with no Black Wednesday the Lawson wing of the Conservative party would have taken the UK into the monetary union from day one. Moreover, the unspoken reason that John Smith et al supported ERM membership is they seen it acting as a useful buffer to prevent the unions making demands on a future Labour government.

There are parallels between the ERM debacle and the UK 2008 banking crisis that offers a window into how the electorate think or don’t think to be more accurate. The Major government got punished by the electorate for Britain’s ERM exit. However, exit was almost entirely positive for the economy. The real negative consequences error was entry and that was not the reason the electorate were punishing them. The parallel with the banking crisis is the error of the Labour government was not how they handled the 2008 banking crisis, which with the exception of the Northern Rock debacle they handled competently enough in the circumstances that prevailed at the time. In hindsight, they should have done things different but we are all experts in hindsight. Their error was in earlier years allowing the build up in debt and overleverage in the banking system. They could have prevented that through the FSA without having to resort to trying to micromanage every part of the economy. However, the electorate was not punishing them in the years after 2003 when the overleverage was occurring. That would of course mean the electorate taking some responsibility for their own actions and we know no matter the issue the great British public always declare themselves entirely blameless.

We don’t know how a Labour government would have handled Black Wednesday ( Golden Wednesday ), and we don’t know if a Conservative government would have done much different in the noughties. However, we can’t get away from the fact that whoever is in government will always get the blame in a crisis.

@10

they are no longer working in our interests, but in their own interest.

I’m not entirely sure where you’ve been for most of the past three decades, but the common thought that the correct way for markets to function is to get everyone within to act entirely in their own interests, which will apparently self-balance itself somehow via competition (which dangerously assumes market actors will even bother to compete rather than sew up the market between themselves), has been hegemonic among western governments during that period.

Quite what made you think the banks were ever working in our interests I don’t know.

New Labour foolishly adopted the Tory/neo-liberal view on the economy during the 1990s and 2000s. Namely the view about light regulation producing better results etc etc. That turned out to be one of New Labour’s biggest mistakes! As some of us were warning at the time.

The only way for Labour to move past this is for them to disown much of the legacy of the Blair/Brown years, and draw a line under it. Much Like Tony Blair did with clause 4.

@ Graham

“New Labour foolishly adopted the Tory/neo-liberal view on the economy during the 1990s and 2000s.”

In hindsight it was a foolish decision. But at the time it seemed like a sensible decision backed up by international evidence and the advice of a wide range of experts. And for a time, quite a long time, it seemed that it was working well. All that Gordon Brown extra spending was paid for with the tax revenues of a light touch regulated City.

However, it ultimately all came a cropper. Labour now just need to be very vociferous about admitting their culpability, take a short term hit, but move on and start to present a genuine alternative.

I suspect Balls has to go as just too complicit in the Brown regime but a new set of faces and a genuinely new and sensible approach to City regulation will reap medium and long term benefits.