£40bn, for what?

It’s about 24 hours or so since the announcement that the government is, after all, going to break up the banks they own. The re-discovery of old banking creatures inside the belly of Lloyds and RBS – Williams & Glyn’s, TSB and so on – is proof of what some of us have been saying all year.

But having thought about it for a day or so, it seems to me that – heavens – it is so incredibly timid. Ten per cent of bank branches will change hands. There are only 170 branches per million people in the UK, compared to 520 in Germany and 960 in France. It is barely going to touch that problem. Nor will it give us the huge diversity of banking that they have to support local economies in the USA.

As much as £40 billion and still nothing like the lending infrastructure we so desperately need.

What we actually need, it seems to me, is something equivalent of the Community Reinvestment Act in the USA (1977). By insisting that banks reveal where they are lending money, American banks have been persuaded to disgorge very large sums over a generation to new local lending institutions, for regeneration, low cost homes and small enterprise.

We badly need the same. I don’t understand why UK politicians are so timid when it comes to these matters, that the CRA has barely featured in debate. What is the matter with us?