Letter: Banking safety

As WE approach publication of the final report in September of the Independent Commission on Banking chaired by Sir John Vickers, the banks have indicated their opposition to both a full-scale separation of retail and investment banking (on the lines of the US Glass-Steagall Act, which served pretty well until 1999) and a more limited "firewall" between such operations within the same legal entity (which the Treasury seems to favour).

There are reports that RBS may be softening its stance on the latter to focus on how such separation could be made to work. No doubt we should be grateful for small mercies, but almost three years since RBS's and Lloyds/HBOS's downfall, and four since Northern Rock's, one might have hoped for the industry to have proposed its own robust reforms long before now; but so be it.

Could RBS now inform us whether its proposals would allow a failed bank to go to the wall without its retail customers suffering and without causing a domino effect, so that never again would the industry in general be able to cause a global or even a UK economic recession; and so that never again would three generations of taxpayers have to bail them out?

Or is the form of free-enterprise capitalism which such bankers purport to believe in, and which they adduce to justify their remuneration, in fact based on no more than a "heads we win, tails you lose" financial model?

John Birkett

Horseleys Park

St Andrews