The UK Is Preparing To Return To "Glass-Steagall"

Tyler Durden's picture

In a very surprising move, the AP reports that the UK finance minister George Osborne has announced a major overhaul of British banks, the key provision of which will be the separation of bank retail and investment business "in order to help avoid another financial crisis" - an act which is in essence a reintroduction of Glass-Steagall. What is stunning about this development is that the banking cartel has allowed the UK to get so far as to effectively repeal Gramm-Leach-Bliley, the act that ended Glass Steagall and allowed unprecedented deregulation to convert formerly safe banks into the mastodon, 50x levered, TBTF hedge funds they are now. And if this is happening in the UK, how long before Europe adopts the same overhaul in order to placate its austerity-ired population, and deflect populist anger where it belongs: the banking oligarchy which continues to defy nature, and the simple laws of bankruptcy, and demands that there is never even the smallest impairment of senior claims. All this may very soon be changing.

From the AP:

Osborne backed the findings of the government-appointed Independent Commission on Banking (ICB) which earlier this year called for a "ring-fencing" of retail businesses.

"Today I have told the Commission that the government endorses both these proposals in principle... We will make these changes to banking to protect taxpayers in the future," he said.

Osborne said he had taken the decision bearing in mind what he said was a British dilemma.

"As a global financial centre that generates hundreds of thousands of jobs, a successful banking and financial services industry is clearly in our national economic interests," he said.

"But we cannot afford to let it pose a risk to the stability and prosperity of the nation's entire economy."

On Zero Hedge, as well as on any other thinking financial websites, the repeal of Glass Steagall has been excoriated to the core, as the gating factor that allowed the financial collapse of 2008. It seems others share the sentiment.

The practice of banks using money from their retail arms to fund
investment operations has been widely blamed as a major factor behind
the global banking crisis.

Additionally, Osborne seems to mean business by putting Northern Rock up for sale:

After months of speculation over Northern Rock, which was nationalised by the previous Labour government, Osborne said the coalition had to "clear up the mess of the past".

"I can announce tonight that on behalf of you the British taxpayer, I have decided to put Northern Rock up for sale," he said, adding that they could "at least get some of our money back."

He did not set a price but the BBC said the government planned to sell it to a single buyer for about £1.0 billion (1.14 billion euros, $1.62 billion), rather less than the £1.4 billion it cost to bail out the lender.

Potential buyers for Northern Rock could include Virgin Money, the Coventry and Yorkshire building societies, investment groups NBNK and Olivant, and Tesco Bank.

Northern Rock plunged into crisis in mid-September 2007 when its exposure to the US-triggered credit crunch forced it to seek emergency assistance from the Bank of England, sparking the first run on a British bank in recent history.

To avert financial meltdown, the government agreed in December 2007 to guarantee all customer deposits and then later nationalised the bank in February 2008 to prevent its collapse.

The lender was broken up into two parts last year, forming a so-called "good bank" that will be up for sale -- and a "bad bank" management company to run down the remaining toxic assets.

Osborne, who has been a regular critic of the banking cartel did not stop there.

He also warned that Britain's economy faced tough challenges.

"Failure to tackle the imbalances during the seven years of plenty before 2007 threatens seven lean years thereafter," he cautioned.

"Storms from the world economy are likely to stir up the waters through which the UK economy must pass as it too adjusts to a new equilibrium with lower levels of debt and a rebalancing from domestic to external demand.

"We have to pass through turbulent waters. But we have set the right course," he added.

In an interim report published in April, the ICB also recommended that banks set aside more capital to avoid future state bailouts.

We wonder just how many mbillions in bribes will it take for our own corrupted politicians to do the right thing and follow the UK's lead in repealing the worst law to have ever been conceived by the banking lobby. Our guess is: a lot. Which is why we are not hoping that this one true means to begin fixing the system will ever come to the US. Instead, America will have to deal with the aftermath of that bloated of worthless legislation known as Dodd-Frank for years, which will likely never be instituted in our lifetimes courtesy of banks' ongoing and successful attempts to delay implementation, preferably until infinity (and not in the Norwegian sovereign wealth fund sense).

h/t Reboil Room

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alien-IQ's picture

...the plot thickens...

jesus_quintana's picture

Don't get too excited Tyler, he's a (lying bastard) Tory. Whatever gets passed will be worthless and certainly won't inconvenience the banks.

malikai's picture

Well he's certainly talking hard.

He meant business with the whole cutting spending thing. Broke the backs of the LibDems at it. But who knows.. This is my first Tory experience.

bernorange's picture

Marcy Kaptur has sponsored H.R. 1489: Return to Prudent Banking Act of 2011 which would reinstate Glass-Steagal here in the USA:

16 co-sponsors as of the moment.  Call your rep and ask them if they are going to support it.

Silvarouvres's picture

More of a Volcker rule than Glass-Steagall I'm afraid. Final details yet to be published but wording like "invisible walls within banks" does not get me too excited. Neither is the British press:

sub Z's picture

lulz... the Volcker rule also skips right over the source of the problem, the shadow banking system

The Feds Connection's picture

Why? Its still fractional/fiat based currency amirite?

agrotera's picture

(deep sigh of relief!) Bravo!!!!! 


Have to hope against all odds...but i agree with the fact that with our banana republic Gotham city type government, we have entrenched corruption...but maybe Batman(Donald Trump) will save us!!!!!

Alienated Serf's picture

do not get too excited about anything getting better.  could be nothing but a show.

yet as a person who witnessed the BOE crush the FSA (in detail), i am shocked.  this is really out of left field.

tyler, me thinks you have not paid enough attention to the SNB.  when the mushroom cloud clears, all will be shocked at the schemes of the SNB.

beware the gnomes of zurich.


theopco's picture

Good onion article.

XenoFrog's picture

If it really happens, suddenly I feel the urge to move to England.

ping's picture

I've got a spare room here. Ignore the holes in the ceiling. They're nothing.

jo6pac's picture

In Amerika it will be business as usual until they have stolen the last pennie.

Everything is on schedule, please move along

agrotera's picture

Thank you for this beautiful song!  I do believe she is right!!!

cougar_w's picture

Buying time.

The banks will allow this.They'll sit back and do nothing. "Yes it may be time for some controls" they'll maybe say.

And the instant everyone's attention has moved to the next show in the moving Bread+Circus they'll proceed to do exactly as they please.

Quickly, while they are weak, kill them all.


Milestones's picture

Imagine the sound of  two hands clapping (loudly)     Milestones

GoinFawr's picture

was that an anti-koan? Like "what is the sound of one hand spanking the monkey"? (j/k, for most of us that is a rhetorical question)

Reptil's picture

This summer, early august. No one is watching, no one is waiting for a descision. JUST LIKE LAST YEAR.


SteveBob's picture

George Osborne was an attendee at Bildeberg in Switzerland the prior week.  Is he doing their bidding or is he fighting against the cartel?

Which is it...

Vic Vinegar's picture

He's doing their bidding.  Not that their bidding is totally opposed to the sheeple's way of life.  It's just 95% opposed to such.

PaperBear's picture

Osborne attended last week's Bilderberg meeting of the oligarchy in St Moritz, Switzerland so why should anyone trust him ?

Alienated Serf's picture

ding ding ding!!!!

yet, no one suspects the swiss


Alienated Serf's picture

ding ding ding!!!!

yet, no one suspects the swiss


swissinv's picture

Not surprised to see GS EMEA office in Geneva or Zurich soon

HitTheFan's picture

I am British.

If this comes to pass, great. Although 10 years too late. At the moment it is just talk.

Will the government actually do it though? Watch how the banks start to lobby and threaten to leave the UK.

Will we have a JFK moment?

Cameron appears genuine, appears sensible, is doing the right things.I wish him plenty of luck, we'll need it.

dick cheneys ghost's picture

Looking forward to june 30th with great anticipation!

OutLookingIn's picture


Kinda like attempting to close the barn door, after everythings gone and the barn burnt down two Winter's ago!

YHC-FTSE's picture

"Will we have a JFK moment?"


You don't sound British. Perhaps one of those sad people who wishes they were American. Barclays will certainly make noises again about leaving which will worry some, and so will the American banks, but it will go through. Quite frankly I don't give a shit if they leave - there are plenty of banks in the World who can take their place and they can go and screw somebody else. I've had enough of their fucking adverts on tv targeting the poorest of our nation with quick money in return for 3000% APR (No joke, not a typo). A little research reveals they are owned by AIG. 


This isn't Cameron's idea anyway. It's Mervyn King's. 

S.N.A.F.U.'s picture

At first glance the threat you describe seems toothless/funny:  "Hey, if you don't let us screw you, rest assured we will go find someone else to screw."

Unfortunately the real threat isn't so:  "Hey Mr. Politician, if you don't take my money in return for letting me screw your constituents, I will find another politician who will -- maybe somewhere else, or maybe right here so not only don't you get the money but you lose your job too."

malikai's picture

Its not that easy in the UK. Politicians here have their campaigns paid for by the goverment. It would serve a business nothing to try and fund their own shill candidate since it is both illegal and unnecessary.

I_am_always_right's picture

"Cameron appears genuine, appears sensible, is doing the right things"

Are you insane. He's an idiot. An absolute puppet. He hasn't a clue what he's doing. He waffles endlessly and has no control.

Errr... that's how it's meant to be, so he's doing a great job. Silly me.

I_am_always_right's picture

"Cameron appears genuine, appears sensible, is doing the right things"

Are you insane. He's an idiot. An absolute puppet. He hasn't a clue what he's doing. He waffles endlessly and has no control.

Errr... ok that's how it's meant to be, so he's doing a great job. Silly me.

I_am_always_right's picture

"Cameron appears genuine, appears sensible, is doing the right things"

Are you insane. He's an idiot. An absolute puppet. He hasn't a clue what he's doing. He waffles endlessly and has no control.

Errr... ok that's how it's meant to be, so he's doing a great job. Silly me.

Problem Is's picture

Wow, robot... a triple post...
NSA surveillance is really jacking up your internet connection...

BTW: Are you talking Pasty British Douche Cameron or
Obama Bin Lyin' with that description???

I_am_always_right's picture

Pasty British Douche Cameron

Don't know what happened exactly but the ZH server crashed whan I was posting up. When it came back up those 3 post appeared. Total disaster eh?

Problem Is's picture

Nah it happens all the time...

You can delete all the text on the duplicates until...

Some ass like me replies to them ;<)

The Fonz's picture

This shit gives me a headache.  Ok, so... is this good or bad for our market?  Man, I'd dance to the tune but the DJ is methed up. 

The Fonz's picture

Damn, that was a stupid question, sorry. Up or down? Over what time frame? I have no idea how to weigh this one into my trading yet. Thank you and appologies.

monopoly's picture

If this is true, how long before the "disease" moves to Amerika. You can bet the Giant Squid will use all its tenticles to stop this, as will the other insolvent, bankrupt banks and brokerage, C, BAC, MS, WFC, JPM. I refuse to believe that the rule of law will return to this evolving banana socialist republic.

candyman's picture

start with mark to market and no more off balance sheet would be a good start

gmrpeabody's picture

HAAAAA hahahahahahahahahahahahahahahahah


Sorry Candy..., I don't know what got into me.

The Profit Prophet's picture

I'm also sorry Candy, but I have to concur with peabody.  Reinstating mark-to-market would immediately bankrupt every big bank (and Country) in the world.  And what's really laughable is that the fantasy asset values that they currently have listed on their balance sheets are leveraged 6 ways from Sunday into hundreds of trillions worth of crap OTC derivatives that are based on these fantasy values. There is literally many many times the World GDPworth of derivatives based on fantasy asset valuations....almost like fairy dust. This is the type of Greed that it took to destroy the world financial system.

T.E.I.N. everyone!