Since the Budget, Labour have been spinning the line that the Government are protecting the rich (particularly bankers) and the poor are paying for the mistakes of the bankers.
On two levels Labour are being mendacious. If Labour were in Government they would not be going after the banks in the way they are now suggesting. The financial sector is Britain's leading export sector, now it is back in profit, Britain would be mad to drive them out our tax receipts. It is an sector of the economy (unlike manufacturing) that can just up and leave. This maybe morally unfair, but it is a fact.
Secondly, bailing out the banks is not the only reason why we have a structural deficit. We have a total debt of about 900 Billion of which 100 Billion was caused by bailing out the banks. We are paying 51 Billion a year in interest payments, so the banks are costing us about 6 billion a year of our 114 billion deficit. In other words, most of the deficit is caused by non-banking crisis activities.
But the public does feel that the bankers have "got away with it", and they did cause 1/9th of our debt, so the public does have a point.
So what can be done, if we can't "punish" bankers through financial means, what about legal means? I would be amazed (even taking into account the lax regulations in place) if nobody had broken the law during this crises. One of the main reasons we haven't seen bankers in prison jumpsuits is that financial prosecutions are notoriously hard to prosecute, the police and CPS don't know what to do and jurors don't have a clue.
I would therefore set up a special commission to investigate the crisis, with powers to prosecute and investigate. Its goals would be to find out precisely what went wrong (and ultimately suggest reforms to prevent it happening again)and where the law had been broken to prosecute and sentence the culprits.
Of course this would have the advantage of casting the light back over Labour's failure to regulate the banks and their less than proper relationships with banks, while at the same time inflicting some much needed public retribution.
