Wendy Davis, who looks likely to lose her bid to be Texas governor. Photo: Stewart F House/Getty
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The US Midterms: the races you need to watch

Rarely has an election elicited a louder national cry of “meh”. But there are some important races buried beneath the banality.

America is abuzz with excitement today as it goes to the polls to elect a third of the Senate and all of the House of Representatives, as well as 38 governors of states or territories.

Well, no, actually, it isn't. In fact, despite the fact that more money will be spent on campaigns this year than in any other midterm election in America’s history, rarely has an election elicited a louder national cry of “meh”. Polls show that interest is record-breakingly low, and especially so among the undecided voters.

Americans are turned off by what many see as a choice between two fundamentally unappealing options: the Democrats, who have largely spent the campaign trying desperately to wriggle out of any suggestion of ties to the Obama administration; and the pretty much equally unpopular Republicans, including the extremist Tea Party.

The odd thing about all that is that actually this election is pretty important. Particularly, a couple of key races could decide whether the Democrats keep control of the Senate – the upper house of Congress – the balance of control of which currently relies on the narrowest of margins.

Then there are the gubernatorial races, which by and large have caught the media’s attention less. Wendy Davis, the Texas state legislator who held that incredible filibuster on reproductive rights last year, is looking likely to lose to current state Attorney General Greg Abbott. Wisconsin’s race is closer – Scott Walker, tipped as a possible Presidential contender in 2016, has the slimmest of leads. Florida, where former Governor Charlie Crist is trying to win back his old job against the genuinely alarming-looking current governor Rick Scott, is also close.

But the Senate is the really important thing about today’s election. Holding on to the upper house of Congress is crucial for the legislative possibilities of Obama's final two years in office, and the results today will shape the country in serious ways. The Republicans already control the House of Representatives; if they take the Senate too they will have carte blanche to pursue a right-wing legislative agenda.

The balance in the Senate could rest on a few key races; these are the ones that will receive the most coverage tonight:

 

Kentucky

The race between challenger Alison Lundergan Grimes and current Senate Minority Leader Mitch McConnell may not be looking as close now as it was a few weeks ago, but there’s still a chance Grimes could unseat the man who is otherwise the secont-most powerful Republican in the country. McConnell isn’t particularly popular, and has had trouble with his pledge to repeal Obamacare – mainly because Obamacare’s rollout in Kentucky has been a spectacular success. But Grimes has also suffered from an embarrassing episode in which she refused to say whether or not she voted for Obama in previous elections.

 

New Hampshire

Former Massachusetts senator Scott Brown has parachuted in to the state as something of a carpetbagger, but is currently neck-and-neck with incumbent Jeanne Shaheen, and the race is too close to call.

 

Alaska

The state that gave us Sarah Palin is a toss-up between incumbent Mark Begich and challenger Dean Sullivan. It’s a long way West, so polls don’t even close until 5AM GMT, so this will be one of the last races to be called – and last time around when Begich won, it was by so slim a margin that his Republican opponent didn’t concede until a full fortnight after election day.

 

Louisiana

Another popular Democratic incumbent, Mary Landrieu, is struggling to fend off a challenger. But under Louisiana’s electoral system, there can be multiple candidates from each party. If one candidate fails to get 50 per cent on the first ballot – which seems likely – then the state goes to a run-off election. There are two Republicans on the ballot, so once they combine, Landrieu could well be out of a job. But this one will run late.

 

South Dakota

A few weeks ago, nobody thought this was going to be interesting. But some recent polling has shown that an independent candidate, Larry Pressler, might be able to pull off an electoral miracle, beating both the Democrat and the Republican challengers. The incumbent is retiring, so the race is wide open. If the people of South Dakota opt for the outsider, it will be strongly emblematic of the people’s disgust with both parties.

 

Iowa

This one’s the big one. Obviously, each party wants to win as many Senate races as possible, but most election models portray Iowa as the bellwether. Polling has Democrat Bruce Braley running neck-and-neck with Republican Joni Ernst – who gained nationwide fame earlier in the campaign with this astonishing campaign ad.

 

Nicky Woolf is a writer for the Guardian based in the US. He tweets @NickyWoolf.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation