It is set to recommend stricter capital requirements for British banks than those being imposed elsewhere.
This, according to Treasury sources, would make it impossible for the FPC to force British banks to hold more capital, as a protection against losses and to slow down lending, as and when the FPC spots a new bubble, such as a renewed and worrying boom in the housing market.
As I said it would yesterday, the Bank of England's Financial Policy Committee (FPC) has declared that big British banks need to raise more capital as protection against possible future losses.
Arguably one of the great weaknesses of the British and European economies is that capital-strapped banks play too dominant a role in the provision of vital finance to businesses (and households).
HSBC's capital ratio is likely to remain more resilient through the British and euro zone recessions when compared with other banks that have been forced to raise capital from governments, he added.
Some will say stable doors and horses come to mind: it might have been more apposite if this had happened before the Great Crash of 2008, which wreaked so much havoc on the British economy in part because our banks had so little capital back then.
The chancellor is resisting, because he fears British banks would be put at an unfair disadvantage compared with foreign banks able to lend more relative to their capital.
Among the British banks Royal Bank of Scotland is most vulnerable to being forced to raise new capital, because under July's health checks its stressed capital ratio emerged relatively low at 6.3% (compared with 7.3% for Barclays, 7.7% for Lloyds and 8.5% for HSBC).
The Treasury is expected to soften the blow by requiring the big banks to raise capital to support only that part of their balance sheet that British tax payers would have to support in a crisis.
The final critique is that adopting ring-fences and piling on more capital will drive up banks' costs and may make credit more expensive in the wider British economy.
An EU 7% capital ratio maximum would also in theory prevent the chancellor imposing a 10% minimum on British retail banks, which has been recommended by the Independent Commission on Banking and has been broadly endorsed by Mr Osborne.
In a globally competitive market, there is also a question of how far an economy like the UK can force higher capital ratios on its banks than other countries impose on their respective banks, without curbing British banks' global ambitions (although not everyone would agree that those global ambitions are a thoroughly good thing).
Mr Cable said UK Financial Investments (UKFI), which was set up to manage taxpayers' shareholding in the banks, should make it clear that their principal duty was to provide capital to the British economy and to British companies.
But British banks must have done something right that such a catastrophe wouldn't eliminate 100% of their capital.
HSBC, a British bank, argues that although this business could be profitable, banks have recently been withdrawing from it as their capital has shrunk.
British banks will not have to raise a bean, partly because they raised tens of billions of pounds of capital, much of it from taxpayers, in 2008 and 2009, and partly because they don't have massive loans to the likes of Greece and Italy.
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