Simon Johnson, Columnist

New U.K. Bank Reforms Miss the Big Threat

U.K. Parliament's report on banks miss the main problem: low levels of equity capital and huge debt.Â

June 19, 2013 at 4:30 PM UTC

Simon Johnson is a professor of entrepreneurship at the Massachusetts Institute of Technology's Sloan School of Management. He is co-author of "Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream."

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The U.K.'s Parliamentary Commission on Banking Standards published a report this morning - almost 600 pages in two weighty volumes -- focused on "changing banking for good."

There are many sensible ideas here, including "making senior bankers personally responsible, reforming bank governance, creating better functioning and more diverse markets, reinforcing the powers of regulators and making sure they do their job." And there are some entirely reasonable specific suggestions such as "The Chief Risk Officer, Head of Compliance and Head of Internal Audit should all have their independence protected, responsibility for which should lie with a named non-executive director."