Banking reform: But what else do the Lib Dems offer?

As Vince Cable announces that the Government will regulate the banks as per the Vickers Commissioned report we should be asking the question what else? Once we have implemented these reforms both the Tories and the Lib Dems will say these are a good think and take credit for their implementation but the Lib Dems need to win back voters and win new voters so what else do the Lib Dems propose to reform the financial sector?

Splitting the high street banks from the investment banks may (or may not) protect the tax payer but it will do nothing to change the culture in the finance industry that is abhorred by the everyday person. Reading the news about billions of pounds given out in bonuses to bankers makes many angry at the injustice or depressed at the hopelessness of their/our ability to make a difference to this.  The Lib Dems have been calling for reform of the bonus system and perhaps we should be making this an element of our vision for a new finance policy?

The problem with the banking reforms is clearly stated by Stani Yassukovich, a former investment banker and one-time head of the predecessor to the Financial Services Authority, the Securities and Futures Authority

Since the political class has a lamentable lack of understanding of how finance actually works, it is forced to rely on advice from roughly the same crew that sank the ship in the first place, in determining how the ship should be remodelled

So perhaps we should be listening to others for advice and one person we should be listening to when it comes to the bankers bonuses is Dan Pink:

In this video he outlines experiments relating to bonuses and motivation and concludes that where a task requires cognitive skill not only do bonuses lead to worse performance but the larger the bonus the worse the performance. So we have a situation where we have the political elite being informed by the bankers themselves about reform of a system that doesn’t work but works for them personally. The result being little reform of the things that need reform. So bonuses continue despite the fact that this system has so spectacularly failed and no one is really coming forward with any real policy on how to bring about a new system that does work.

Ed Miliband tried with his good vs bad businesses but that misunderstands and over simplifies the problem with the system. His solution was to provide incentives for the type of business he likes but that is not a change in system. A better way to communicate it would be to say the system allows and even promotes businesses which harm the country, something Vince Cable has said on many occasion to the dismay of the Daily Mail and the delight of the Guardian.  We should use this as it was distinctive and appealed to potential voters. We should develop it further.

We should be more vocal on the fact that the system does not work and we need to replace bonuses with a different mind set. Dan Pink would suggest that it should be replaced with autonomy, mastery and purpose. Linking the banking activities to these attributes improves performance while at the same time is good for the country.

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