Responding to the recommendations of the Vickers report, which include the ringfencing of banks' high street businesses from their "casino" investment banking arms, Caroline Lucas, MP for Brighton Pavilion, said:
"While the Vickers report includes some steps in the right direction, the fact that it fails to offer truly wide ranging and meaningful proposals for bank reform reveals a fundamental flaw at the heart of the ICB.
"The Commission's narrow remit renders it powerless to address the issues key to creating a safe and useful banking system - such as the nature of credit creation and tax reform, as well as bankers' bonuses.
"We are still in recovery from the biggest financial crisis for 80 years and struggling to keep our heads above the deep waters of recession, whilst spending billions on ‘too big to fail' subsidies for the largest banks (2).
"Yet all the ICB can offer UK taxpayers is a limp collection of compromises which will fail to protect us from future banking catastrophes.
"For example, simply ringfencing ‘casino' investment banking and high street banking won't work - not least because contagion can still spread between the two.
"These are different operations requiring different regulations, which only a complete structural separation between retail and investment banking can provide.
"Add to this the fact that Vickers suggests giving banks until 2019 to get their houses in order and it seems that the intense lobbying by the banking industry has really paid off."
The Brighton Pavilion MP continued: "Ultimately, no one is asking the crucial question - what should a good banking system look like?
"We need to do far more to ensure universal access to low cost banking services, and to force banks to provide affordable finance to small and medium businesses.
"We also need far more diversity in the banking system in the shape of, for example, mutuals and credit unions - in order to reduce our exposure to market instability and protect us from the worst effects of casino capitalism.
"By increasing the number of smaller banks, we can boost competition and choice in the UK banking sector, where the majority - 85% - of current accounts are held by five banks giants.
"Compare this with Germany, where only 13% of banking assets are held by the large international banks, with local and mutual banks accounting for 70% of the sector - where SMEs can expect far greater financial support, and where the 'too-big-to-fail' subsidy comes in at 38% lower than ours."
Notes
1) http://www.bbc.co.uk/news/business-14877865
2) http://www.neweconomics.org/blog/2011/09/08/osborne-should-drive-a-hard-bargain-for-british-banks-%C2%A346bn-subsidy