Sir John Vickers is laughing all the way to the bank(ing commission). As a movie plot, the publication of his report, immediately followed by a spectacular demonstration of why we needed it, is much too far-fetched. It would have seemed preposterous for a bank to suddenly find itself short of $2 billion, thanks to some bad bets at the casino.

“Delta One” sounds whizzy, but its underlying operation is as old as it is simple: promise some muppet investor a return linked to some fashionable index, and then bet his money on something else. The banks’ traders always think they can beat the market, and much of the time, they can’t. Even beating such pedestrian indices as the FTSE100, with its mechanical rules for quarterly constituent changes, is much harder than it looks. Just try it.

It’s very helpful for UBS to have an individual trader to blame. It distances the bank from the event, and the individual can be pilloried as the rotten apple in a barrel of perfect Golden Delicious. The truth, as the ever-lengthening line of these disasters demonstrates, is that the banks encourage reckless behaviour. Nobody gets fired for making $2 billion from a rogue trade that comes right. If his bet on black comes up, he gets a life-changing bonus. If it’s red, it’s not his money.

Oswald Gruebel,  the man who, six months ago, was warning against excessive regulation , says he found the news “distressing”, but it’s not personal distress. That’s for the shareholders, left to pay the bill and contemplate their plunging investment. If Grubel is genuinely shocked, then he really hasn’t been paying attention. Where does he think the profits come from? The mundane businesses of fund management and private banking are far too dull to produce the sort of returns investment bankers demand.

As Sir John Vickers enjoys his schadenfreude this weekend, he might reflect that if anything, his report did not go far enough to split utility and casino banking. Yet the glory days for investment bankers may already be behind them. Playing the markets with almost unlimited quantities of money, raised cheaply on the back of the state’s inplicit too-big-to-fail guarantee, has been a wonderful game, but the game is up.

Bankers’ criticisms of Vickers have mostly focused on the extra cost and reduced availability of loans to businesses, but what they really mean is the extra cost and reduced availability of money for the casino. There is no inherent reason why conventional loans should cost more; they may even cost less, as the state guarantee inside the ring-fence becomes more explicit. Finding the money to sustain the bankers’ gambling habit will be harder and pricier. Bonuses may have to be earned. Perhaps this $2 billion sacrifice from the UBS shareholders will not have been in vain.

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