13 Nov 2015
Prof David Llewellyn delivers prestigious memorial lecture
Speaking at the University of Birmingham, Professor Llewellyn considered the regulatory lessons from the banking crisis, how regulation has responded, and some of the outstanding issues that remain.
He outlined how one of the biggest banking crises in history has been followed by the biggest-ever change in the approach to the regulation of banks, with the regulatory response to the crisis being substantial in terms of intensity, range of measures, scope, complexity, and the detailed content.
Professor Llewellyn argued that regulation has become too intensive and unnecessarily complex with over 8000 pages of new regulation.
Professor Llewellyn also argued that there are limits to what regulation can achieve because bankers also seek to circumvent regulation. He suggested that attention should be given to the regulation of so-called ‘Shadow Banks’ and the taxation of banks to cover the costs imposed by the recent crisis and possible future bank failures.
He concluded by saying that a particularly key issue in the UK is that of bank culture following a series of serious scandals. Whilst there is a lot that regulation can do, such as setting the ground rules and framework, there is a limit to what it can achieve if the underlying culture of banking is wrong. If banking culture is not reformed there will be yet more detailed, extensive, and costly regulation.
Professor Llewellyn was speaking in his capacity as Chair of the Banking Stakeholder Group of the European Banking Authority and following his extensive research into banking.
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