Sir, The incompetence of the Government and the financial authorities is almost unbelievable. For years customers and regulators have had to cope with the consequences of limited competition in the UK’s retail banking sector. Now, the only response to a new threat is to promote further mergers (“Fear stalks the banks”, Sept 18).

The Government has had 12 months to think about what would happen if a large bank were threatened. Its reaction is to disregard all considerations of competition — back to the 1970s at its worst. There are alternative methods of helping banks under attack without forcing them to merge; all that is required is competence and a clear commitment.

For both competition and financial stability, we need more — and smaller — retail banks in the UK. If the Competition Commission can force BAA to divest one or more London airports, then similar action can be taken against retail banks. The alternative is yet more regulation, which is both ineffective and stifles innovation.

Professor Gordon Hughes

Department of Economics

University of Edinburgh

Sir, It is misguided to lay too much blame for the credit crisis at the door of banks and bankers, as there has been a rush to over the past few days and weeks. Like the US Administration, the British Government has lived beyond its means for most of the past ten years. The Treasury has missed almost every forecast of borrowing requirements, but has treated the matter with apparent contempt by manipulating or abandoning its own rules. It has no Plan B for the economy turning sour.

Although it might make people feel good, bashing the City is not going to address the problem — in fact it will make it worse. Financial services are key for jobs and prosperity in Britain. We need to look at ourselves and our Government to make sure this does not happen again.

Tim Harris

St Albans

Sir, The banking industry is mesmerised by the desire to offer products for sale. Its private and corporate customers, however, simply want their banks to act as a safe pair of hands looking after their money and to facilitate viable and reasonable lending. The fund managers have treated huge assets as a massive reserve for gambling in the hope of earning disproportionate bonuses.

If the Financial Services Authority were to impose more stringent rules to control the actions of managers and their cohorts it is just possible that the endemic risk-taking culture in banking would be modified to a degree that would be widely welcomed. The banning of excessive bonuses on windfall profits would be a good starting point for getting the banks and their employees to realise that they are managing their customers’ money, not their own.

Alan Harris

Bromley, Kent

Sir, It’s not all doom and gloom if what rises from the ashes is a more responsible, better regulated, less greed-orientated, financial sector.

Reg Kemp

March, Cambs

Sir, Will the phrase “drawing a blank” now be used to refer to a “chance” meeting with the prime minister of the day, and subsequent carte blanche approval to take over your biggest rival?

Max White

Gloucester

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