He said the collective liabilities of the UK's banks were currently four times larger than the entire economic output of the economy.

"We have to insulate the economy and the taxpayer from carrying these liabilities," he said.

"We need to have a sustainable and prosperous banking sector where the taxpayer is not liable."

Mr Clegg said he was attracted to the idea of separating the trading arms from the retail arms of big banks, which is why the government had set up the Independent Commission on Banking (ICB) to look at this option.

He did not, however, express any preference for how this would be done in practice. The ICB was "looking at all potential models", he said.

Above all, "the banking system needs to be made safe", he said.

Mr Clegg also attacked the previous Labour government for creating the conditions under which the financial crisis unfolded.

"Labour oversaw the City when it was gorging on bonuses and let the housing market become a casino," he said.

The new shadow chancellor Ed Balls was part of the administration that allowed these conditions to develop, he said.

I was listening to an interview on the Radio this morning and it got about 10 minutes in before I realised it was Clegg rather than Cameron. Not only were the policies he was espousing surprisingly non-liberal, they really do sound almost exactly alike.

Jon

http://www.bbc.co.uk/news/business-12261364


So that will be another aspiration. I wonder how quickly this will be abandoned.


AMazing how short politicians memory is. It was the deregulation that the last Conservative government that allowed the banks to make a mess of it all. New Labour just carried on doing what the Tories and bankers wanted. There were few comments from the Conservatives prior to the crash.

The last government had plenty of opportunities to sort out the regulation of the banking sector. Thirteen years of doing sweet FA about it. Thirteen years of wasted opportunities but looked the other way.
The deregulation by the previous conservative government may have help the banks make a mess but if your in power that long you can't keep on using the excuse that it was the them not us.

The problem is is that its easy to say and very hard to do esp in the times of a recession

Bank can and do move their “Head Office” to places that are more favourable (Tax / Regulatory etc) wise

You are unable just to kick them out at this time as the loss of the banking sector would
- Hit the tax take we get (and it’s still substantial)
- Dry up what little mortgage / small business lending there is

It is estimated that the Banking sector contribute around 10% of the total UK tax take so if we lost even a small percentage of that it would mean greater taxes or greater cuts
source

In a boom you can be harder on them as they will weigh up the costs of the regulation against the profits – in a recession the profits may not be that good so it’s cheaper to move

I like the idea of building societies. They are much less risky.

Same here. I think longer term the banks should be banned from the residential property market that way they cannot over inflate the property market. That was what happened till the 80's.

There is / was talk of making Northern Rock a mutual Co again when its sold off from public ownership

Yes that would be good, but I cant see this government doing that.

Also they will raise more money selling it off to another Bank / someone who wants to get into the UK banking market.