I, too, strongly support this amendment. This is a serious matter. It is not a backstop, or at least I do not see capital as a backstop; I see it as the foundation upon which safer financial institutions can be built. We debated in great detail, quite properly, the regulatory process and all of the regulatory initiatives, but at the end of the day there is nothing that can protect the public and the depositors other than a strong capital foundation.
In a characteristically robust article in today’s Financial Times—which of course I will replace in the Library—John Kay said:
“It is hard enough to find people capable of running financial conglomerates—the fading reputation of Jamie Dimon, JPMorgan Chase chief executive, confirms my suspicion that managing these businesses is beyond the capacity of anyone. The search for a cadre of people employed on public-sector salaries to second guess executive decisions is a dream that could not survive even the briefest acquaintance with those who actually perform day-to-day supervisory tasks in regulatory agencies. They tick boxes because that is what they can do, and regulatory structures that are likely to be successful are structures that can be implemented by box tickers”.
He goes on to say:
“Financial stability is best promoted by designing a system that is robust and resilient in the face of failure”.
That is what a strong capital base does.
It is very important that the Financial Policy Committee has the power to do this. Of course, politicians can always be relied on to make the right decisions but, as we know, when political priorities are to encourage Chinese banks to come to London, for instance, they are allowed to open branches. I am sure that China is a better credit risk than Iceland but it gives you an insight into how decisions can be made by politicians. It is very important that the Financial Policy Committee is given the power to make these decisions, and to make them independently, just as the Bank of England does over interest rates.