Volcker: Ring-fencing insufficient to protect taxpayers

Former Federal Reserve chairman Paul Volcker has hit out against plans to ring-fence UK banks, warning they will not be enough to protect British taxpayers from another financial crisis.

Plans to force UK institutions to ring-fence their core retail arms from "casino" investment divisions would fail in the event of a bail-out scenario, Volcker (pictured) told the Telegraph. "In my experience ring-fencing is not terribly effective. It only works in fair weather, but does not work in foul weather. They have already run into problems and they are bound to run into more," said Volcker, who has been tasked with reforming the US banking system. His comments follow Sir John Vickers' recently-published banking reform proposals, which champion ring-fencing over a complete sepa...