This is an idea that is gaining traction and is whizzing around the electronic ether in London. A US Senator is demanding that Timothy Geithner, the Treasury Secretary, identify which banks are “too big to fail” and break them up. Bernie Sander, an independent from Vermont, has a record for populist rhetoric. He puts out a weekly video on YouTube, “Senator Sanders Unfiltered”, on which he claims: “The middle class today in this country is in desperate shape and the gap between the very, very wealthy and everyone else is going to grow wider.” He has now brought the “Too Big to Fail, Too Big to Exist Act”, which requires Geithner to say within 90 days which banks fall into this category and to break them up within a year.
He says that the disappearance of various rivals means the four biggest banks — JPMorgan Chase, Bank of America, Wells Fargo and Citigroup — now issue one in two mortgages, two out of three credit cards and hold $4 in every $10 on deposit. “No single financial institution should have holdings so extensive that its failure could send the world economy into crisis.”
? A reader receives an apologetic letter from Royal Mail. A package has been left on the doorstep and gone astray, not surprising given the Mail’s recent problems, and details of the problem have been logged, passed on to the local delivery office, etc, etc. The letter is stuffed with the usual formulaic stuff from a “Customer Service Advisor” and ends “please be assured that we take letting our customers down seriously”. Is this precisely what you meant to say? I rather think not.
Advertisement
A funny thing happened on the way to the Wharf
Not For Tourists, an edgy guidebook on the various delights available in London neighbourhoods, has given Canary Wharf a strong thumbs down. The “urban manual” has attacked the Wharf for its “sterile malls” and “bankers talking credit derivatives in chain bars” and warns: “Watch out for ruined brokers tumbling from the windows above.” There is the odd attraction, a contributor notes. “There’s free comedy, too — just sit by the Tube and chuckle at the latest round of suited t****rs to be given their P45.”
? Paul Deighton is the Goldman Sachs banker who extracted more than £100 million from the bank and, in 2006, became chief executive of the London Organising Committee of the Olympic Games. So he got out just as the banking sector went kaput, his fortune attached. And does he appreciate this lucky timing? “I would have liked to be at Goldman during the credit crunch,” he tells Director, the magazine of the Institute of Directors. “Although it would have been scary and stressful, it would have been a brilliant experience.” What do they put in the water at Goldmans?
Advertisement
A bright idea?
In the blue corner: James Tobin
In all this talk of a Tobin tax on financial dealings, who was Tobin?
He was James Tobin, a Yale economist who in 1981 won the Nobel Prize for Economics.
The original idea of a “Tobin tax” was to discourage speculation on financial markets and spend the money on deserving projects in the Third World or on the United Nations. A tax of only 0.1 per cent, he thought, would do the trick but not harm markets.
Advertisement
It was tried in Sweden in the 1980s, nowadays not exactly a powerhouse among financial markets — the two facts are not unconnected.
On winning the Nobel prize, Tobin was asked to summarise his complex reasoning. “You know, don‘t put all your eggs in one basket.”
The next day’s newspapers read: “Economist wins Nobel prize for saying, don’t put eggs in one basket.”
Do you have a diary story? city.diary@thetimes.co.uk