Chancellor of the Exchequer George Osborne announced a major overhaul of Britain's banks Wednesday by approving a separation of their retail and investment businesses to help avoid another global financial crisis.
Osborne, part of the Conservative party heading a coalition with the Liberal Democrats, also unveiled the privatisation of Northern Rock, three years after it was nationalised to save it from collapse in the global financial crisis of 2008.
In a high-profile annual address to finance leaders in central London, 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 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."
This is pretty huge news. When the firewall between retail banks and investment banks was destroyed here in the US by Congress and President Clinton, it set the stage for the disaster that followed just eight years later. Britain too followed suit on repealing these provisions, and the result was a nightmare manifest.
Odds of this happening in the US of course are as close to zero as things ever get in Washington politics. With trillions of dollars at stake, there's no way our lawmakers would dare do something like this. And that's an incredible shame.
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