Leading article: Let the battle on the future of banking commence

Politicians appoint expert commissions for different reasons.

Sometimes they are set up to tell a minister that what they want to do is right. Sometimes they are designed to kick a tough political question into the long grass. And, very occasionally, they are established to examine a subject with an open mind and to give a government the best possible expert guidance. So the question of the moment is: what sort of body is the Independent Commission on Banking (ICB), which held its first public meeting yesterday?

There are grounds for hoping that this will be of the virtuous, rather than the cynical, kind. The ICB has an independent-minded membership and its terms of reference are broad. But when it comes to the crucial question of whether to split retail banks from their investment arms, this newspaper believes that the case for that separation is already sufficiently made. Only a complete separation will suffice to end the "too big to fail" problem. Only a division can prevent investment bankers' risky bets from being underwritten by taxpayers.

The idea that smarter regulation will do the job is a delusion. So is the idea that sophisticated firewalls can be created within banks. It is simply not credible to argue that, in the midst of a 2008-style crisis, the investment arms of universal banks will be allowed to go bust. The banks have already begun their lobbying efforts to fight reform. Chief executives are already issuing threats to remove their corporate headquarters from Britain if any structural change is imposed by the Coalition. We can expect to hear much more of this sort of subtle blackmail over the coming year. It is no exaggeration to say that this is one of the most important political battles facing the country. The broad interest of the British taxpayer is arrayed against the narrow interest of the investment banks.

And by next September – possibly sooner – we will know which side this commission is on.