This evening Bank Governor Mervyn King, in his speech at the Mansion House to the assembled great and good [sic] of the City, placed himself firmly on the side of fundamental banking and regulatory reform. This is a mighty and controversial challenge. He's very directly called the bluff of the Government, who despite repeatedly promising 'fundamental' reform of the financial system, have ended up rather weakly blaming Directors at the banks. This sort of 'must try better next time, chaps' injunction is really insufficient to address the systemic problems last Autumn's crisis revealed.
Blaming the system - that is, the tripartite system of divided-rule regulation and the ability of mega-banks to deploy Government-guaranteed customer deposits to finance risky trading activities - is something that appeals to unions such as Unite, who have dismissed 'tinkering' as a way forward. They are demanding radical reform in much the same terms as the Governor.
Vince Cable and George Osborne will weigh in, and pretty soon you have a set of foes who a weakened Government will not be able to see off. As the Chancellor can't be seen to unpick the system created and backed repeatedly by his ill-favoured predecessor, they're in a bit of a quandary here. They'll look not just overly kind to banks, but also weak, ineffectual, insincere, complacent. So on the wrong side of the argument - again.
At least they could have produced some sort of diversionary but ultimately futile flim-flam institutional reform - but they just don't seem able to get around to it. Instead another front has opened up in the the credibility wars that are gradually eating this Government alive.
And in other news, Brown continues to get bitten by everything he touches. The inquiry into the Iraq war, for instance: why couldn't he hold most of it in public with the sensitive information disclosed in camera? I can't see how going over all this stuff again in full view is going to electrify the public. So what political harm could be done to his administration? Blame it all on Tony anyway.
Also why announce when the inquiry was going to report and so leave yourself open to the charge of deliberately delaying its conclusions? Leave that to the committee and just make sure they have so much to look at (including lots of 'sensitive' stuff...) that they simply won't be able to report within a year. So a potentially positive public relations gesture ends up confirming people's ugliest (but correct) suspicions of his secrecy and double-dealing.
After all, if you're going to be secretive and double-dealing at least have the good sense to be, er, secretive and double-dealing about it. What astonishes about Brown is that although he compulsively indulges in the lowest of low politics, he's just not very good at it.