Recommended Reads | Are the UK Investment Banking Reforms Targeting the Wrong Guilty Party?

A recent article in the Telegraph criticizes  George Osborne's new banking reforms by saying that that while the remedy might be correct it is in fact targeting the wrong ailment. By focusing the new reforms on Investment Banks,  from the Telegraph argues that Osborne is missing the wood for the trees since it was retail banks that are to blame for the crisis. Excerpt from the article

His promise to insist on an "electric" ring-fence for retail banks when the parent company also owns an investment banking operation is, of course, expressed in language which is largely incomprehensible to the layman. Essentially, ring-fencing is the practice of assigning specific reserves to a specific portion of a bank's business. The idea is that if a bank fails because of losses in the investment bank, the assets against which retail deposits are held are protected and are not used to pay investment banking creditors. Electrifying this arrangement simply means punishing banks who flout the rules, iIn this case by empowering the Bank of England to break them up.
There are solid reasons for doing this, but its aim is to prevent a repeat of the last crisis, and in this regard it is a failure. It was retail banking, not investment banking, which was responsible for the carnage in the global economy. The sub-prime loans bundled and sold and bet on by investment banks all originated as bad loans made by retail banks." 

Read the article here 
Imarticus Opinion: Harish Thakkar says,

It's difficult to pin point whether retail or Investment banking caused the crisis and any debate is a futile one because hindsight is always twenty-twenty.  No business is bad until quality is compromised. Retail Banking businesses compromised on the quality of loans for better bottom lines - Read Profit. Investment Banks created products and traded at uncontrollable leverages , for the same thing - Read PROFIT. While risk should perhaps be the most important word in the world of banking, it still seems to lag behind the word "Profit" . Crisis is caused when Profit matters far more than quality of business.  So I would blame neither retail banking nor Investment Banking; I would blame it on "Excesses".

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