We all know that senior bankers are a bunch of liars, criminals and fraudsters. But even their so called – er – “professional” body, the British Bankers Association is into lies.
In today’s Financial Times there is a letter from the BBA’s Chief Executive, Anthony Browne, which trots out the old line about raised bank capital requirements increasing banks’ funding costs. Yes we’ve all heard that one before and anyone with a decent knowledge of economics knows it’s a lie. The main reason why that “funding cost” argument is nonsense was set out by Messers Millerand Modigliani.
The letter also fails to say anything about bank subsidies. Why so shy? Well the reason is that while bank regulations have certainly been tightened up a bit, the actual extent of that “tightening up” is pretty feeble. Indeed according to Gordon Brown, Britain’s former prime minister, the new regulations are a farce. And the BBA doubtless knows it.
And the BBA doubtless also knows that the alleged improvements to bank safety are so feeble that there is not a cat in Hell’s chance of taxpayer funded deposit guarantees being removed (one of the subsidies enjoyed by banks).
That’s why Anthony Browne kept quiet about bank subsidies.