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Who will scrutinise the nationalised banks?

There is a rising chorus of criticism of the ineffectiveness of Parliament during the current crisis. Today in The Guardian for instance, Simon Jenkins launches a stinging attack on the failure of the House of Commons to break away from its grouse-shooting long summer recess and compares it unfavourably with the American and Icelandic legislatures which he says, with some vindication, have stepped up to the mark.
I think he is being unfair in suggesting that MPs were roaming the moors looking for game as I suspect a majority of them don’t even have a passing familiarity with a grouse, dead or alive. The reason for the recess stretching all the way through September is the party conference season, still plonked in its traditional place in the calendar and still kicked off by the TUC at the beginning of September as it has been for over half a century. It has long looked an irrelevant circus, well past its sell by date, with none of the main parties daring to allow anything approaching genuine debate (let alone dissent) they are pointless talking shops.
This year they looked even more irrelevant as the financial storm clouds gathered and the winds of chaos blew with ever greater force. They should have been at Westminster, creating a sense of genuine purpose, articulating the fears and concerns of ordinary people – as the US Congress did so effectively – and injecting some much needed urgency into the Treasury, Bank of England and Financial Services Authority.
They missed that opportunity, however. So, what now?
I think Parliament has to look very hard at how it will scrutinise these newly nationalised – whether partially or wholly – financial institutions. I think the House of Commons Treasury Select Committee will do a good job in probing the regulatory triumvirate that looks to have been sleeping on the job and the bankers whose lack of understanding of their own businesses tipped the world into crisis. People will expect blame to be apportioned and will want to see those most responsible squirm and be punished: John McFall’s team is well placed to do this and to take it to the next, more constructive, level which is trying to understand what we have to do better to prevent such disasters befalling us again.
What I do not think they are well placed to do is to scrutinise how taxpayers’ stakes in financial institutions are being managed. This needs a fresh approach. No-one outside of a few City boardrooms expects the government to sign a blank cheque to bail-out institutions that have created, participated in and exacerbated the global collapse of financial markets. They need to be held to account and to have someone constantly looking over their shoulders on our behalf.
Parliament should set up a new Financial Institutions Select Committee made up of both MPs and Lords and chaired by Vince Cable, the Liberal Democrat’s widely respected Treasury spokesman. This committee should have extensive powers to demand that the directors of banks appear before it, that the institutions benefiting from public subsidy produce top quality financial information for it and also that they submit plans for major investments to it. This would breathe new life into Parliament, demonstrating that it has a new found determination to protect and promote our interests.

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