Northern Rock and Banking Reform

I see that he knows it. The updated edition has a wonderful long chapter on banking difficulties. Taking securities and selling them on is not new behaviour. Often in their history, banks have found something that will make them a lot of money, which some poor sucker will buy on the basis that they can sell it on to another poor sucker. That is the way they do things. The problem is not about China, Africa or India. It is about high yields, as the right hon. Gentleman said, and nothing more. The Chancellor said that he wished we could have some ““old-fashioned banking”” that was sensible and tight. Such banking is epitomised by the hon. Member for South-East Cornwall (Mr. Breed), who is glaring at me—no, he is smiling at me. It involved bankers who cared about their customers and were happy with a steady profit, but that is not what the national bankers are like. I wonder whether hon. Members remember the tulip bubble in Holland. A particular tulip became very valuable. The price went up and up until the last sucker said, ““But this is not worth much.”” The reply was: ““No, but you've bought it.”” By then, the rest were out of the market. ““A Random Walk Down Wall Street”” mentions all kinds of exercises like that. Layman though I am on banking, I remember when all our banks were investing in south America. I was the leader of the council up in Leeds at the time, and I was trying to get some of the brass to come to Leeds and invest there. They would have got good yields, but modest ones compared with what they were being offered in south America. Of course, when the south Americans got all their brass, they said, ““Bye-bye, we're defaulting.”” I remember the high-tech bubble. People put their money in high tech, and why? Because of the yields. It was about greed. They did not question, they just bought, because they could sell at a great price. That attitude is what we are up against. If the Northern Rock situation has done anything for us, it should have allowed us to look past Northern Rock to what bankers are doing.