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Banking Bill

My Lords, I regret that I was unable to attend the latter part of the Committee stage, when what is now Clause 235 was debated. I congratulate those who stayed to the bitter end at gone two o’clock in the morning on their stamina. Had I been present, I would have supported the concerns expressed by the noble Baroness, Lady Noakes, and the noble Lord, Lord Eatwell. The principal shortcoming of the clause was that it almost entirely overlooked the fact that we have a tripartite structure for regulation and crisis management. The clause was entirely introspective, making provision for a change in the structure within the Bank but making no reference to the other players. Hence the amendment, which would insert the words, "““in co-operation with the Treasury and the FSA””." I am pleased to see that the Government have come up with a similar wording. We can debate whether our wording is better than theirs in due course. I know that some people—indeed, some people of great eminence—perhaps driven more by nostalgia than by evidence, long to return to a world where the whole system revolved around the Bank. This Bill, in my view correctly, works on the premise that the tripartite structure should be retained but strengthened. For example, earlier clauses sought to define the areas of responsibility in which each player takes the lead. The old system did not work in the modern world, where threats to financial stability come from insurance companies such as AIG, which I believe is still the largest recipient of assistance anywhere in the world to date, from investment banks such as Lehman Brothers and, in the crisis in 1998, from hedge funds such as Long-Term Capital Management. If the tripartite system is to be retained, it makes sense for the Government to show their commitment to making it work well and to entrench some wording that places a duty on each of the players to collaborate fully. I, too, will wait to hear what the Minister has to say before deciding whether to support the Government’s wording. However, I think that we are both seeking the same outcome.