Small is more beautiful to protect us from the banks
John Varley's criticisms of the United States' proposed banking reform — championed first by the former Federal Reserve chairman Paul Volcker and now by Barack Obama himself — are twofold.
He doesn't like the direction the US has gone in, or that it has chosen to travel independently, rather than seeking international consensus.
Both complaints are misguided, though you can understand why Barclays, with its highly profitable investment banking arm, doesn't like what President Obama has to say. For one thing, the US will not go down this route alone. The Obama administration's proposals are painted as individualistic, but in fact simply use a different route to get to the same destination.
The UK prefers strong new capital requirements for those with risky activities — the method also being worked on in Basel right now — but taken to its logical conclusion, this new approach will also break up the banks.
As for the substance of the reforms, Mr Varley argues that rather than size, it is risk that is relevant in banking.
Well, we certainly need to monitor risk, but the point about the move towards smaller banks is not that this would mean no more collapses — just that a failure would not lead to systemic collapse.