The LibDem Treasury spokesman's agenda for regulatory reform is as informed, detailed and measured as would be expected from Cable, combined with what is surely the most vociferous criticism of City finance to be voiced by any mainstream British politician for a generation.
From mild mannered Vince, this is a very British tirade.
And Cable is sounding the alarm bells partly because he believes that the MPs expenses crisis has seen the debate come full circle so that, once again, fears of over-regulation dominate.
The bankers’ view is that UK politicians need to get off their backs as quickly as possible and get the banks back into the private sector; to reverse “penal” (ie, 50 per cent) marginal tax rates; and to stop the European Commission, or more self-confident UK regulators, from “undermining the City’s competitiveness”. These arguments are winning. Indeed, there is a danger that the counter-revolution could soon become a rout.
Cable advocates a separation between utility and casino banking - an idea he floated in his Fabian Review interview last December.
why should banks be allowed to pursue the maximisation of shareholder value – and management bonuses – when they are underwritten by the taxpayer? This question has never been answered properly. Banks should either surrender their protection and compete like other firms, or be protected and have their profit regulated like utilities.
The arguments about City “competitiveness” are "bogus, self-serving and dangerous" writes Cable. "Stifling innovation" is part of the point of regulating excessive risks
The other argument is that regulation (and 50 per cent tax rates) will undermine the City’s “competitiveness” and “drive away” banking and non-bank financial institutions. This argument has to be met head-on; the idea of a regulatory race to the bottom does not square with political and economic reality. Co-operation rather than regulatory arbitrage between the main jurisdictions will always be best, but if that co-operation does not materialise, the UK should not chase business by offering low standards that create wider risks for the UK economy.
But what is most striking is Cable's choice of metaphor: if his proposal is for multilayered, multilateral regulation, he seems clear that the politics depends on a willingness to leave some blood on the City trading floors. Just as no Labour Chancellor in the last century ever came close to making class a political dividing line as vehemently as Lloyd George did with his People's Budget in 1909, can you imagine any Labour politician employing as colourful a metaphor to make this point as respectable, cut throat Vince does?
There is a more fundamental argument about the scale of Britain’s financial services industry in relation to the UK economy. I wouldn’t expect the City to vote for contraction, or for curbs on its freedom to operate, any more than I would expect turkeys to vote for Christmas. But the poultry farmer – the Labour government – cannot just ask the turkeys what they want. He has to be willing to wield a knife and cut some throats. A combination of national, European and global regulation is necessary to ensure that the vast negative externalities associated with the City do not exceed the (genuine) benefits that the UK economy derives from a successful, internationally traded, financial services sector. In addition, there will have to be a major structural adjustment out of traded financial services into other services and manufacturing.
I recommend taking 10 minutes out with the dead-tree edition of the New Statesman to concentrate on the argument.
But you can read it all here too.