LONDON (Reuters) - Paul Volcker, the former U.S. Federal Reserve chairman, will appear before Britain’s Commission of Banking Standards this month, Andrew Tyrie, chairman of the commission, said in the Financial Times on Tuesday.
Volcker, architect of the “Volcker Rule” governing so-called proprietary trading by U.S. investment banks, will appear before the commission on October 17 to compare and contrast banking behavior and practices between Britain and the United States.
Volcker’s appearance will fuel suggestions that Britain is taking a fresh look at structural reform of Britain’s banks along the lines proposed by the Vickers Commission last year.
In the United States, the “Volcker Rule”, the precursor to the publication of Independent Commission on Banking chief Sir John Vickers’ banking reform proposals in Britain, is aimed at preventing banks from making risky financial market trades for their own gain when the trades might be against their customers’ interests.
In an opinion piece in the FT, Tyrie said cultural shortfalls and measures providing banks with protection from the full disciplines of the market need to be tackled.
“Gaps in the law that have allowed banking malpractice to occur require attention. The common perception is that the law has done little to deter practices that often seemed criminal, to victims and observers alike,” he said
Tyrie also points to a “gap in knowledge and understanding” between banks and their customers as a clear need for higher standards in banking.
“Recent scandals have amply illustrated the consequences; a failure of banks, and the culture within banks, to meet acceptable standards,” said Tyrie.
“The commission will not be able to address all of these deep-rooted problems in a few months. But we can at least signal some remedies, suggesting ways to protect taxpayers better from the consequences of bank failure and to improve the experience of dealing with banks for customers of all types,” he said.
The Parliamentary Commission on Banking Standards was launched after the British government came under pressure to scrutinize banks after Barclays (BARC.L) was fined for manipulating interest rates.
The commission is expected to make legislative proposals by December 18.
Reporting by Stephen Mangan, editing by Philip Barbara