Basically these are 'All the King's Horses and All the King's Men' arguing about how best to put Humpty-Dumpty together again. Larry Elliot is scathing:
"...[after the] most serious financial meltdown in living memory. .....the government is planning no more than a slap on the wrist for the discredited bankers. The message from London – and from the Obama administration in Washington today – is that the chance for radical overhaul has been ducked."Mervyn King's position is interesting because, on the surface, it appears more radical than that of either Darling or Obama. He wants to insure against systemic risks. He says its not sensible to allow large banks to combine high street retail banking with risky investment banking or funding strategies, and then provide an implicit state guarantee against failure. But his answer is:
"Either those guarantees to retail depositors should be limited to banks that make a narrower range of investments, or banks which pose greater risks to taxpayers and the economy in the event of failure should face higher capital requirements. Or we must develop resolution powers such that large and complex financial institutions can be wound down in an orderly manner. Or, perhaps, an element of all three. Privately owned and managed institutions that are too big to fail sit oddly with a market economy."(My emphasis)There is nothing here, on either side of the apparent argument, which questions the dominance of our banking sector over other bits of the economy. There is just a technical argument about how best to get the system working again in the long term and how to technically prevent another lash-up of the scale of last autumn. Nothing about breaking the banks up into manageable proportions. Nothing about holding on to some bits of the current nationalised banks as regional or industrial development finance agencies, nor even anything on the scale of Glass Seagall.
This, of course is a reflection of the big difference between now and the post 1929 period. Then the problem for Obama, Darling and King's predecessors wasn't simply an apparent systemic failure but the existence of systemic alternatives in the form of the still young Soviet Revolution and Fascist Germany. No such alternative exists today and it is very, very striking how little progress the Left has made in building any support for such an alternative despite the depth of the crisis.