THE Archbishop of Canterbury
asked the Chancellor, George Osborne, on Monday, why he lacked the
"will" to break up the "colossal" banks that risked harming the
economy.
Mr Osborne gave evidence on
Monday afternoon to the Parliamentary Commission on Banking
Standards, which Archbishop Welby was appointed to last year, when
he was Bishop of Durham (
News, 20 July 2012,
18 January).
Archbishop Welby told Mr
Osborne that the Commission had discovered during previous evidence
sessions "that you can have big, simple banks, or small, complex
ones, and you can usually manage them if you're competent. Big,
complex banks are not only too big to fail: they're too big to
manage."
Archbishop Welby went on to
say that the Chancellor was "continuing to defend the idea of a
small group of absolutely colossal banks. . . Is this lack of will
to break them up and reduce them to a size that eliminated risk to
the economy not simply a recipe for a repetition of the disasters
we've seen in the last few years?"
Mr Osborne responded: "I
completely accept that running a large, complex bank is a difficult
task, and can fail. And that is why we're ring-fencing the retail
banks [from the investment banks], so we can protect the thing that
is essential for the functioning of the economy.
"But I don't think it would
be possible to create in Britain a world where we just had a lot of
very small banks. We live in a heavily interconnected global
economy; some of the big players in our country are not British
banks. Unless we were to close our doors to all of them . . . I
don't think that's that realistic."
Archbishop Welby asked Mr
Osborne to explain how he intended to control "global banks", which
were "significantly more risky to the British economy". Mr Osborne
said that he hoped that regulators such as the Prudential
Regulation Authority, which will supervise banks from April, would
"ask questions of judgement rather than just questions of
form-filling".
On Tuesday, Archbishop Welby was introduced into the House of
Lords for the second time, and appointed again to the Parliamentary
Commission on Banking Standards. He was introduced into the Lords
for the first time after being consecrated Bishop of Durham. The
Lords Spiritual have their seats in the Upper House by virtue of
the occupancy of their see: translation to a new see requires being
reintroduced into the Lords.