Five questions answered on the new banking reforms

Are we right to jail reckless bankers?

The government has today said it will back most of the recommendations made by the Parliamentary Commission for Banking Standards (PCBS). We answer five questions on the plans for reform.

What key recommendations is the government planning on implementing?

The key changes are:

There will be a new criminal offence of reckless misconduct by top bankers resulting in a possible jail sentence.

If a bank has been bailed out bankers bonuses could be repayable. Bonuses are also to be deferred by up to 10 years.

If any bank breaks any rules, the burden of proof shall lie with the relevant senior bankers to show that they took all reasonable steps to stop it happening.

What recommendations are the government not taking up?

The government did not agree to employ a much tougher leverage ration for banks, limiting the total amount of loans and investments a bank can make relative to the amount of capital the bank holds in order to absorb losses on those assets.

This would ultimately toughen limits on banks’ risk taking.

Chancellor of the Exchequer, George Osborne, has decided instead to stick to the lower level agreed and set out by the Bank for International Settlements in Basel.

The government has also refused to abolish its holding company for its stakes in Royal Bank of Scotland and Lloyds Banking Group, called UK Financial Investments. It said: "UKFI is staffed by highly expert professionals with extensive experience in the banking sector".

What else has Osborne said?

Today he said: “The government is determined to raise standards across the banking industry to create a stronger and safer banking system.

“I am pleased to say that the government will implement its main recommendations. Where legislative changes are required we will amend the Banking Reform Bill which is currently before Parliament.

“Cultural reform in the banking sector marks the next step in the government’s plan to move the whole sector from rescue to recovery and ensure that UK banks demonstrate the highest standards, and are able to support business and drive economic growth.”

What other changes will be made?

The Prudential Regulation Authority, which is responsible for ensuring excess risks do not build up within the banking system, will be given an extra job of ensuring competition among banks.

Is the government considering any changes in the way the Royal Bank of Scotland is handled?

The government did say it would consider the PCBS’s suggestion of splitting the Royal Bank of Scotland into a ‘good’ high street bank - that can be quickly sold back to the private sector – and a ‘bad’ bank which should be kept and existing problematic loans worked out. 

Guests listen to speeches at the "Lord Mayor's Dinner to the Bankers and Merchants of the City of London" at Mansion House on June 19, 2013. Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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