Hammering the banks won't help business Throughout the rate-fixing scandal, the sages of finance have been queuing up to set out their prescriptions. Sadly, these mostly seem to involve blowing the dust off previously delivered sermons. Thus, the past few days have seen Vince Cable waxing lyrical on the need for greater state intervention in channelling credit to businesses, and Ed Miliband seeking to persuade us that his widely derided "predators and producers" speech was in fact a prescient road map for the future of capitalism. Many of the criticisms are no more than common sense. The banking industry certainly is too concentrated, with newcomers finding it too hard to win market share. Bankers have behaved badly, and not just over Libor rates: Mr Miliband cited the mis-selling of financial instruments to small business, a scandal that the Telegraph exposed. It should be easier for customers to switch banks. We do indeed need a banking system that works for every part of the economy, and of the country. Where things fall apart is when it comes to solutions. Mr Miliband wants to return to a world where your local banker greets you with a cheery smile and a generous overdraft. But of his proposals, some are already in train, in the shape of the Vickers Commission's recommendations; some are too long-term to have any immediate effect; and some are deeply problematic. The plan to carve the five big banks into seven by forcing them to sell branches ignores the hideous problems affecting the existing disposal process. Putting an "ordinary employee" on remuneration committees, apparently to cow their members via moral outrage, would be nothing more than a stunt. Especially laughable was Mr Miliband's claim that Labour "did strengthen regulation from what had gone before, but not enough." In fact, he and Ed Balls were in thrall to the banks - as was the rest of the Labour government in which they served. Of course, Mr Miliband's speech was not meant as a serious piece of policy: it was about setting himself up as the hammer of the bankers. But we risk fostering a deeply misleading narrative, in which the banks are seen as responsible not just for the crash, but for the subsequent squeeze - that they are failing to lend, and that this alone is causing the economy to freeze up. True, some businesses are finding credit hard to come by, but that is not the whole story. With companies hoarding cash, and a crippling lack of confidence in the economy, banks feel as inhibited as everyone else. Regulatory uncertainty, and opportunistic politicians howling for their heads, will not improve matters.