Bank reforms 'using 1930s solution to 21st century problem'

The final set of recommendations from the Independent Commission on Banking (ICB) has provoked a mixed response from commentators, with some warning the cost of the move could drive up risk taking by the banks, while others welcome the 'safety measures' to prevent future bailouts.

Octopus Investments’ CIO Lothar Mentel criticised the proposals, saying they were attempting to use an outdated solution to deal with a modern problem. “These reforms are a case of addressing the symptoms rather than the causes of the financial crisis. What is more, they apply 1930s remedies to the complexities of the 21st century’s global credit markets,” he said. “Let us not forgot that neither Northern Rock nor Lehman Brothers were universal (retail and investment) banks. Few can deny that it was the widespread collapse of trust in the unregulated and poorly supervised structured c...