My Lords, it was, along with other Members, a privilege to be a member of the Parliamentary Commission on Banking Standards. I want to add a few words to what has been said. As a member of the commission whose view on this matter was for full separation, I signed up to the recommendation in order to have unanimity in the committee and because for the rest of us, with due deference to the most reverend Primate the Archbishop, it was an act of faith. That is what the recommendation from the committee was, because ring-fencing is at the moment theoretical. Without naming the person, I well remember someone on the Vickers commission saying to me, “John, we lost our nerve and advocated ring-fencing”. I do not want us to lose our nerve but I want us to be vigilant on this issue.
I well remember the evidence given to us by Paul Volcker who, noble Lords will remember, said, “I cannot really understand what the situation will be if you are the holding company which has authority over
the ring-fence. If it comes to making a decision by that holding company’s executives about the future of the company, then the executives of the holding company will win over the decisions at the ring-fence”. At the end of the day, it is the holding company that matters. There is therefore something uneasy and illogical about this issue.
I also well remember another witness, not at the banking standards commission but elsewhere—Willem Buiter, when he was on the Monetary Policy Committee before he went to Citibank to be its chief economist—saying, “Remember that the half-life in the financial services industry is less than three years”. In other words, people will forget what has happened before. Having spent nine or 10 years as chairman of the Treasury Committee, all that I can say is that the banking industry is ever vigilant. If we sit back here for a four or five-year period and then return to the matter to see what has happened, the landscape will have changed completely. All that I would add to noble Lords’ comments is that if this House does not express that it has to be vigilant at all times, we are going to lose out and it could be to the disbenefit of ourselves as a Parliament and to society.