Paul Volcker: UK bank reforms will be hard to achieve Mr Volcker, an architect of banking reform proposals in the United States, said separating the two types of banking would be "effective to a considerable extent" in allowing risky parts of banks to fail without damaging the main business. But he told a parliamentary inquiry on banking standards that putting the theory into practice was not easy. "Based on the American experience, the concept that different subsidiaries of a single commercial banking organisation can maintain total independence either in practice or in public perception is difficult to sustain," Volcker told the Parliamentary Commission on Banking Standards. Banking reforms in the United States, Britain and Europe all require "careful regulatory definitions and supervisory oversight" to ensure functions are kept separate, he said. Volcker, 85, Fed chairman from 1979 to 1987 under Presidents Jimmy Carter and Ronald Reagan, has been involved in drafting new U.S. regulations, due for completion by the end of the year, including the "Volcker rule" which aims to ban banks from taking risky bets for their own gain. Britain plans to go further and force banks to separate their retail banking - over-the-counter type saving and lending services - and "ring-fence" them from risky investment and trading activities. Volcker said there were holes in such a system that "are likely to get bigger over time." "It's all kind of awkward," he said in regard to setting up separate subsidiaries. I don't know what it means to have an independent board that is a subsidiary of another board. Britain's banking inquiry was set up after a series of scandals, including the manipulation of Libor interest rates by Barclays Plc and the mis-selling of insurance policies to millions of customers by all big banks.