Treasury select committee: baffled by counter-cyclical buffers

http://www.guardian.co.uk/politics/2013/jan/15/treasury-select-committee

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'Governor, I would now like to turn to the core indicator sets on counter-cyclical buffers," said the Tory MP David Ruffley. He was one of the MPs interrogating some of Britain's financial panjandrums, including Sir Mervyn King, governor of the Bank of England. All of them knew exactly what he meant. To them, the term "counter-cyclical buffer" is as meaningful as "pint of bitter, please" to the rest of us.

As for me, my head began to loll. Stay awake, I ordered myself. Be like your famous predecessor, Bernard Levin, who used to stick a ballpoint pen under his chin, nib up, so that if he did drop off the excruciating pain would wake him.

"The significant headwinds to internal capital generation include a rise in conduct-redressed costs," declared Andrew Bailey, who works at the FSA's prudential business unit.

Ha! I think I know what he means. The banks are having to pay so much moolah for their shady and possibly criminal activities, eg mis-selling and Libor fixing, that they can't grab enough. They are like a drunk filling his car and spilling half the petrol.

The experts do know they have to make some of their talk comprehensible.

John Thurso MP said governments were "always unwilling to remove the punchbowl while the party is in full swing". It was time, he thought, "to hold the banks' feet to the fire". This sounded like quite a bash. Someone said something about "deeply complex and deeply fragile models". Well, models love parties, but what with the drugs and the anorexia, they can't eat anything, or enjoy the punch.

By now I am alert, nose quivering like a greyhound who's just sniffed the rabbit. Two MPs start to speak in English. Labour's John Mann, never knowingly under-common-manned, leapt on someone who said the Basel agreement had to satisfy "the markets, the regulators and the banks".

But who, he demanded, was looking after the taxpayer and the unemployed? They looked as if he'd asked what it all meant for koalas. What had taxpayers and the unemployed got to do with anything?

Tory MP Andrea Leadsom declared we had an "oligopoly" (I don't know what this is, but it sounds ghastly) of banks who were confident they could rip us all off.

Her Conservative colleague Mark Garnier said the system had "flawed foundations, the walls are thin and the pillars are brittle. But you didn't mention the ringfence". The ringfence had something to do with the Vickers report on how to divide the banking pie. So it was a Vickers and tarts party.

Garnier thought we might need to electrify the ring fence. He can ask for that till the cows come home, which they can't, because the ring fence has been electrified.

Brooks Newmark MP wanted to know how much we might have to pay to bail out the nationalised banks. "Just a ball park figure," he suggested. "It's a very big number," said Michael Cohrs, a Bank of England director, unhelpfully. Newmark tried again. Would it be near to £10bn, £20bn or £30bn?

None of them would reply. Indeed the financiers seemed rather shocked to be asked, like a group of respectable elderly ladies asked to "gerrem off for the lads".