PLAID is right to call for any banking reform to benefit small businesses. It is very important that the Banking White Paper does not water down proposals for the separation of retail and investment banking interests which will protect ordinary customers money.
That said, few outside the Westminster village will be shocked to discover that the wealthy banking lobby have successfully in persuaded the Con-Dems to relax recommendations from the Independent Commission on Banking. These recommendations related to enforcing a separation between retail banks, which hold savers deposits, and investment banks which use investors funds to make money (casino banking).
Plaid also called for an end to credit default swaps for businesses, warning that small companies have been mis-sold complex financial products by banks and then have found themselves in financial difficulty afterwards. A complete separation of retail and investment banking interests should provide significantly better protection for customers and small businesses and should take much of the risk out of banking.
We should never again allow ourselves to be in the situation where private sector investment banker's failures can effectively bring the economy crashing down on the rest of us. Retail banks where consumers, including families and small businesses, deposit their savings need to be protected thus ensuring their long-term sustainability.
All pretty sensible stuff, the bad news is that the banking lobby already appear to have been busy persuading the Conservatives and Liberal Democrats to water down the recommendations of the independent commission on banking. The problem is that weakened proposals may not protect small businesses who have been mis-sold complex financial products in recent years and some of whom may never see their money again.
Plaid Cymru has long argued that banks should not have interests and risks which could be to the detriment of the entire sector and to the wider economy. The problem is that when New Labour had their noses in the trough (between 1997 and 2010) the importance of the financial sector grew from 11% of the total economy to more than 18%.
This unbalanced the economy largely because New Labour (and the Conservative Government's before them) turned their backs on the manufacturing sector, something that hit the Welsh economy and our manufacturing sector badly and ensured that an even greater inequality between London and the rest of the UK. This is one of the reasons why the UK was hit so badly when the crash came and has been struggling to recover since.
Interestingly enough a recent poll in the Independent on Sunday (17.06.2012) revealed that 59% thought that George Osborne is out of touch with the public (20% disagreed and 21% didn't know), 25% thought that he is leading the country's economy in the right direction (46% disagreed, 29% didn't know). Some 52% thought he was arrogant (24% disagreed and 24% didn't know) and 48% thought that he had made too many mistakes to be taken seriously (25% disagreed and 26% didn't know).
Additionally 25% agreed that George was doing a good job in difficult times - some 46% disagreed and 27% didn't know. The final poll question asked whether citizen Osborne is too posh to understand the financial pressures on ordinary people – 55% agreed, 23% disagreed and 22% didn't know.
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