18/07/2011 12:40 BST | Updated 17/09/2011 06:12 BST

Have MPs Got Their Courage Back?

Perhaps now they've found the courage to challenge Murdoch, a few MPs might discover that in a democracy you can challenge anything and anyone.

Why isn't the banking crisis as profound an outrage as the phone hacking scandal?

I appreciate that everyone has phones and therefore can understand how obnoxious phone hacking is. Like everyone else I share the revulsion that followed the revelation that Milly Dowler's phone had been hacked. And yes I'm aghast at the collusion between the tabloid press, the police and politicians. I fully appreciate that everyone is disgusted by elites cozying up to each other to make money out of other peoples' misery.

But the banking collapse revealed exactly the same behaviour. Politicians were regularly courted by the City. Debt and fraud ran entirely out of control while bankers made money out of risk; politicians enjoyed the very phoney sense of affluence the country temporarily enjoyed. And if we are all uncomfortable with the revolving door between journalism and PR, how much more repellent is the sight of former Prime Minister Blair working for Goldman Sachs?

The truth is that the banking collapse will end up having cost every British citizen a great deal more pain and suffering that the News Corp. fiasco ever can. The spending cuts which are only just now beginning to hurt will impact everyone everywhere. The NHS procedures no longer on offer, the home care unavailable for the elderly, music lessons and school trips cancelled, repairs all over the country that aren't being addressed: all of these have only one cause which is the redistribution of wealth from the taxpayer to the banks occasioned by the financial crisis. You won't need to be a celebrity or a crime victim to be touched by this; only the very rich will be untouched.

In other words: the people who are paying the price of the banking collapse are the people who did not cause it. The people who did cause it have got off. And why? Because MPs are afraid. Just as they used to be afraid of Murdoch, today they are still afraid the banks will take their business away (a threat they regularly make) and they're afraid they don't really understand how the financial industry works.

The banking sector as a whole has always hidden behind immense complexity. Asked to ringfence consumer savings - the most moderate of proposed regulatory reforms - HSBC's Chairman Douglas Flint launched into fully fledged gobbledegook: " At a minimum we believe it would be appropriate to defer adding incrementally to the burden until the impact of the Basel III and related regulatory architecture changes have been observed." What does that mean? It means he wants to carry on gambling with your money until at least 2019.

Complexity has been the banker's friend. Unlike the phone hacking scandal, most people tune out quickly, unable to follow the detail. But don't be fooled. The narrative is actually quite simple: The banks failed and we're paying for it because politicians are afraid to stand up to them.

Perhaps now they've found the courage to challenge Murdoch, a few MPs might discover that in a democracy you can challenge anything and anyone. That, in fact, is your job. Perhaps Ed Milliband can use his new found bravery to attack yet another unelected institution that wants to write its own rules. Only this institution touches every man, woman and child in the country.