Banking needs to become boring again

What’s wrong with simply putting people’s money to work, in a safe place, to mobilise the investment for the long-term?

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David Powell is an economics campaigner for Friends of the Earth

This weekend, the Sunday Times reported that Ed Miliband has been urged by some of his parliamentary candidates to stop making cat-hissy noises at the financial sector and to ‘hug a banker’.

The argument ran like this. Miliband is giving the impression of a chap not at ease with high earners, and that this might dissuade aspirational sorts from voting for his party. Primarily it’s a question of narrative. Labour may think it has policies that the financial classes could support, but the worry is that said classes think Miliband would replace all clothing boutiques with gulags and impose punitive taxes upon their third homes.

So, talk nice. Be friendly; hug a banker, just like that Mr Cameron did with the huskies and hoodies.

It’s worth saying that the angle the Sunday Times put on it is not, as I understand it, entirely cricket. There was more to the “hugging a banker” line than just seeking to be nice to city bigwigs.

I know this because it was me that coined the phrase ‘hug a banker’ in the first place, while kicking around ideas for a campaign for a financial system that doesn’t exploit people and knacker the planet. The phrase stuck amongst financial reform types, following the ground-breaking Transforming Finance conference Friends of the Earth and  other organisations held last year.

As I’d conceived it – and the spirit in which I understand it was actually used – ‘hugging a banker’ was about something more fundamental than a communications makeover. The central idea was that banking, done better, can be a genuine force for good and that bankers need not necessarily be reviled and despised.

In a splurge of deregulation on both sides of the Atlantic in the last 30 years, banking has become free-wheeling, footloose, swollen, and massively powerful. Building societies became banks, the line between deposit banking and high-stakes casino gambling became disastrously blurred, and the whole edifice teetered on the verge of swallowing itself whole (and very nearly did).

It was tantalising all right; it paid (and still pays) astronomically well; it drained the finest brains in the country away from more useful pursuits. Yet huge chunks of it were predicated on a pyramid of largely ‘socially useless’ gambling; derivatives of derivatives of derivatives.

It took some doing to be less liked and trusted than estate agents and politicians, but after their tumble from grace, bankers managed it. Despite the desperate attempts of the likes of Barclays to convince us they’re good guys really, the public are still not onside. The opportunity, and potential mandate, is still there for proper financial reform, of the type the government’s tinkering has failed to deliver.

What does real reform actually look like?

More local and ethically-driven finance hooked around sustainability principles and actually getting money where it’s needed. It would no longer be geared towards short-term bonuses and profits, but more to delivering genuine social and environmental good.

It’d be banking in the interests of a qualitatively better economy, stocked with a diverse panoply of co-operatives, mutuals, local banks, crowd-funding platforms and  outfits like the Triodos or Ecology Building Society – not just sulky, unloved megabanks.

Ultimately it’s about making banking a bit more boring. Because as a concept, what’s wrong with putting people’s money to work, in a safe place, to mobilise the investment for the long-term that people, communities, towns, cities and  nations urgently need?

It’s not glamorous, but I’ve never been convinced that financial stewardship should be. Some things, like dentistry or chimney maintenance, really don’t need to be full of pizazz.

To be honest, I don’t know to what extent Ed would even be interested in making friends with the bankers. He’s got a pretty strong line going on at the moment hooking into the general public discomfiture with fat cats and their mendacious ways.

Indeed this very disquiet should be the springboard for a genuinely transformative package of financial overhaul – maybe pitched around the Transforming Finance charter of fair, ethical and diverse banking, encouraging socially-useful innovation, and investment as if the future matters.

One Response to “Banking needs to become boring again”

  1. Denis Lenihan

    The media constantly harp on about Labour’s
    relationship with the City and with the ‘Business Community’. But while there may be influence and power residing in these entities, they contain relatively few votes. It is therefore incumbent on Labour to do the exact opposite and represent the majority of society (as represented by the voting public) against these vested interests.

    The only reason that I can see why a left political party would pander to these interest groups would be to obtain funding for an election campaign (Blair and Brown?) in competition with the Tories, who receive huge amounts from the City . The result would be similar to that in the USA where big-business contributes to both main parties political campaigns – all the
    better to hedge their bets!

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