Britain's biggest banks to be forced to separate retail banks from investment arms

[Zero Liability]

As long as they can borrow for next to nothing, there won't be much of a change in how they assess risk.

[AtW]

As long as they can borrow for next to nothing, there won't be much of a change in how they assess risk.

With investment banking being inherently more risky and with separation from retail it would mean those will be allowed to fail, then surely their borrowing costs would be much higher?

10% base rate me thinking for the likes of Barclays Kapital

[Zero Liability]

I'm referring to this. As long as central banks try and keep these as close to zero as possible, the casino will remain in play. The article Xoggoth linked is pretty spot on, although the author doesn't directly implicate the role of central banks (she does indirectly by reference to o/n borrowing) or government policy encouraging homeownership, nevermind the government sponsored 'enterprises' in the US that created a ready buyer for mortgage debt. At present there is more of a case to be made, however, that ZIRP (by stimulating the 'reach for yield') has turned investment banking into a casino as well.