Speaking at the City Banquet at Mansion House yesterday, FSA chief Adair Turner reflected on his interview last month with Prospect in robust terms, declaring that “I do not apologise for being correctly quoted as saying that while the financial services industry performs many economically vital functions, and will continue to play a large and important role in London’s economy, some financial activities which proliferated over the last ten years were ‘socially useless’, and some parts of the system were swollen beyond their optimal size.”
You can read the full text of his speech online here, and it comes highly recommended as both a summary of Turner’s position and as a riposte to his critics’ suggestions that the social usefulness of economic activities cannot be judged. Such judgements must be made, argues Turner—and this includes a recognition that it is the services banks provide to their customers rather than the money they can make for themselves that are the fundamental justifications for their existence. As Turner puts it:
To regain trust, banks need to refocus their energies not on those over-complex products of no real use to humanity of which Stephen Green spoke, but on their core functions of providing savings and credit and payment products to customers, whether individuals, companies or institutions.
It’s a quietly radical message for our times, and Turner combines it with a warning that a fudamental debate on what banking can and should mean must not be pushed aside the moment prosperity begins to glitter again on the horizon:
The real enemies of the City’s success and of the market economy, with all its great potential to spread prosperity and opportunity, are not those who raise these issues, but those who want to ignore them, as if the near-death experience of our financial system only 12 months ago had simply never occurred.
As our editor, David Goodhart, put it on this blog a few weeks ago, “Turner has once again proved himself a very useful public intellectual and a good advertisement for both intellectual self-confidence (oh, that we had more politicians like him!) and the old mandarin generalist principle….” He continues to do so. This debate deserves to run and run.