How to punish a banker

My column for the Financial Times is unimpressed with the administration's proposed "financial crisis responsibilty fee" and argues that there are better ways to upset the banks.

The administration is assuming that if banks object to the levy, it must be good. This is only half right. Arousing protests from the banks is a necessary condition of intelligent reform, but not sufficient. Banks would howl about serious proposals for higher, and cyclically adjusted, capital ratios, for example - but that change would actually affect their future behaviour. Banks will oppose efforts to regulate pay. Again, those protests should be faced down: rules are needed to discourage excessive risk-taking. The level of bank pay, as opposed to its structure, causes offence: if you must, infuriate bankers by raising taxes on very high incomes. These are fights worth having.

The banks' unpopularity would make it easier to win them - unless half-baked ideas like the levy deflect the anger in unproductive directions.