James Barty
Senior Consultant to Policy Exchange, Financial Policy, 2011-2013
In November of 2011 James Barty became the Senior Consultant to Policy Exchange on Financial Policy after almost 25 years in the City. He worked at NatWest, Deutsche Bank and then a hedge fund, Arrowgrass Capital Partners, in that time. He started as a corporate banker before switching to economics in 1990 when joining Morgan Grenfell (subsequently integrated into Deutsche Bank in 1994). He was Chief UK Economist, Co-Head of European Economics and then co-head of Global Economics before switching to equity strategy in 2001. He headed DB’s European Equity Strategy group before going to run Global Equity Strategy and Asset Allocation. In 2006 he moved to the hedge fund business initially inside DB and then as an independent fund from 2008 onwards, where he was a partner responsible for macro strategy and as well as working on the risk and hedging for the fund. Arrowgrass Capital Partners was a multi strategy fund, dealing with bonds, equities, derivatives, distressed debt and M&A. At Policy Exchange he has published work on executive pay, Bank of England reform, capital requirements and privatising RBS and Lloyds. He has been actively involved in researching SME finance and has recently hosted a panel event and roundtable on the issue in conjunction with Santander.
Related Publications
Help to Save: Defusing the pensions time bomb
11 million people are at risk of entering ‘pensioner poverty’ when they retire. With the average pension pot standing at £36,800 a person will need to save six and a half times more to reach the £240,000 required to generate the government’s recommended retirement income of £16,200. Help to Save calls for government to make it obligatory for people to save for their retirement by removing the opt-out in the existing auto-enrolment scheme while also increasing individual contributions to pensions as their incomes rise over time.
Ringfencing UK Banks: More of a problem than a solution
This report argues that a rigid ringfence around UK banking activities risks creating a swathe of unintended consequences including further closures of high street branches and even the end of ‘free’ banking. However, due to the amount of political capital already expended on legislation, ringfencing legislation is unlikely to be abandoned, so the report sets out a number of recommendations to ensure that UK banks remain competitive and are in a position to be able to lend to businesses and consumers.
Financing Small and Growing Firms post
A new Policy Exchange report, The Fog of Law, co-authored by Tom Tugendhat and Laura Croft, shows how the application of civilian norms to military conduct has led to a surge in legal claims against the Ministry of Defence (MOD). The costs of litigation have now risen out of proportion with forecasts, with the number of claims brought against the MOD totalling 5,827 in 2012-2013.
Privatising the Banks: Creating a new generation of shareholders
Privatising the Banks examines four scenarios for the state to sell off RBS and Lloyds, arguing that the best approach will be a mass share distribution coupled with sales to retail and institutional investors. Under the mass share distribution, applying taxpayers will receive shares worth £1,100-£1,650 on a no upfront cost, no risk basis.
Capital Requirements: Gold plate or lead weight?
Bank lending to private companies in the UK has fallen in every single year since the financial crisis, dropping a staggering £57 billion since 2008. Capital Requirements: Gold plate or lead weight? says that the primary reason for this lack of credit is due to the financial regulator’s desire to raise the capital requirements of UK banks.
Reform of the Bank of England: A new Bank for a new Governor
Reform of the Bank of England argues that the Bank of England's focus on monetary policy meant that it was not prepared for the impact of the freezing up of the financial markets and the collapse of some of the UK’s biggest banks. The report argues that without major reform to the Bank, the new financial regulatory regime currently going through Parliament risks being as flawed as its predecessor.
Executive Compensation: Rewards for success not failure
All company directors should be forced to repay bonuses if they underperform. Executive Compensation advocates introducing “clawbacks” to all bonus contracts as the best way to end rewards for failure in the boardroom. Clawback would also be an effective way of ensuring shareholders are able to reduce the outgoing pay of a poor performing director who had decided to resign.
Policy Exchange's response to the BIS Shareholder Voting Rights Consultation
Shareholder votes on executive pay packages should only become binding if a company fails to secure the necessary threshold of votes in two consecutive years. In a response to the Department for Business Innovation and Skills’s consultation on executive compensation, James Barty says the government’s proposals to make shareholder votes on remuneration policy binding is an overreaction. Instead the UK should replicate the Australian model which gives companies a year […]
Sovereign Default: Lessons for Europe from Argentina’s default
Sovereign default has become a reality in Greece with profound implications for the rest of the Euro Area and the international financial system. This paper looks at what lessons can be learnt by examining the last major sovereign default in Argentina 2002.Related Blogs
It should be compulsory for people to save for later life, if we’re to defuse the pensions timebomb
James Barty, Policy Exchange's Senior Consultant for Financial Policy, sets out his new report Help to Save. The report highlights the pensions time bomb the UK has found itself holding, with the average pension pot less than a sixth of what it needs to be. James calls for overall pension contributions to rise from 8% to 12%, government-issued annuity type bonds and removing the ability to opt out of auto-enrolment pensions.
The real story on small business lending isn’t restricted to RBS alone
James Barty, Policy Exchange's Senior Consultant for Financial Policy, criticises policymakers for being dishonest when they urges banks to lend more whilst at the same time insisting that they become safer. James argues that banks' capital ratios need to be relaxed in order to boost lending to SMEs, a case he made in Policy Exchange's report Capital Requirements.
Government must incentivise us to save more
James Barty, Head of Financial Policy at Policy Exchange urges the Government to ensure that Britain saves more for the future to encourage higher investment. He also argues that China saves four times more than the UK, with high investment and a trade surplus.
Bank capital rules are holding back a credit binge - but also our recovery
James Barty, Senior Consultant, Financial Policy at Policy Exchange writes that while the recent growth figures are encouraging, capital requirements are preventing banks from lending more which is hindering a full recovery.
All taxpayers should have a chance to benefit from the Lloyds privatisation
Following the successful sale of 6% of Lloyds to institutional shareholders, James Barty, Head of Financial Policy, Policy Exchange writes that the government needs to go further and sell off its remaining shares to the public. A mass distribution of shares would allow taxpayers to benefit from any rise in the share price.
Five years after the Lehman Brothers collapse, have efforts to reform finance been a success?
Five years after the fall of Lehman Brothers, James Barty writes that efforts to reform finance have not been a success. He argues that while the financial system has undoubtably been strengthened since the collapse, it has come with a price, exceptionally weak credit growth.
Why capital rules could limit the impact of new competition in banking
Following the launch of the new TSB bank, James Barty, Policy Exchange's Senior Consultant for Financial Policy, writes that the arrival of new competition combined with the Funding for Lending scheme should bolster the supply of credit. However, both the chancellor and the governor of the Bank of England, Mark Carney, will need to allow banks more room to do so by loosening regulations on the amount of liquidity banks are forced to hold so they can then replace liquid but non-productive assets like gilts with new loans.
Dear Governor: This is what you must to do succeed at the Bank
In an open letter to the new governor of the Bank of England, Mark Carney, on his first day in the job, Policy Exchange's Head of Financial Policy James Barty urges the new governor to replace QE with credit easing and loosen the rules on capital ratios in order to get the banks lending. He also suggests that Carney should employ more senior people with financial markets experience.
It's time to privatise RBS and Lloyds
James Barty, Senior Consultant for Financial Policy at Policy Exchange, sets out the plans from his report Privatising the Banks for selling off RBS and Lloyds. After examining several options, James sets out a mass share distribution, coupled with sales to institutional and retail investors, as the best option.
A blueprint for returning Lloyds and RBS to the private sector
James Barty, Policy Exchange's Senior Consultant for Financial Policy, sets out his plan from report Privatising the Banksfor a mass share distribution of RBS and Lloyds shares to taxpayers.
Funding for Lending isn’t working: Why the Bank is missing the point
James Barty, Policy Exchange's Senior Consultant for Financial Policy, sets out why the Funding for Lending Scheme is not working, making the argument from his report Capital Requirements that high capital requirements are preventing banks from lending to small businesses. James says the Bank of England must promote credit growth and revert to buying corporate debt directly from the banks.
Bank of England weakens economy by demanding further bank capital
James Barty, Policy Exchange's Senior Consultant for Financial Policy, writes in response to the Bank of England's recent announcement that banks must raise £25 billion extra in capital requirements, arguing that this measure will stop banks lending and prevent economic recovery. James cites findings from recent Policy Exchange report Capital Requirementswhich found bank lending to private companies has fallen since 2008 by £57 billion due to capital requirements being set too high.
Osborne was right to oppose the EU banker bonus cap
James Barty, Policy Exchange's Senior Consultant for Financial Policy, sets out why George Osborne was right to fight the EU bankers' bonus cap. James argues that a cap on bonuses would make banks less safe because it introduces more rigidity into the system and could trigger banks to relocate to other financial centers free of restrictive legislation.
The five questions Mark Carney must deliver answers to
James Barty, Policy Exchange's Head of Financial Policy, sets out the five questions he would pose to incoming Bank of England Governor Mark Carney. The key answers Barty seeks are how Carney would organise the Bank, how he would stimulate the economy, his views on capital ratios, his plans to move from targeting inflation to growth and how he would judge success five years from now.
Should the Bank of England’s objective be changed?
James Barty, Policy Exchange's Senior Consultant for Financial Policy and author of recent Policy Exchange reportReform on the Bank of England, highlights the reasons why the Bank of England should change its objectives. James argues that rather than continuing to measure growth by inflation, the Bank should consider following the US Federal Reserve model which would mean targeting maximum employment, stable prices, as well as moderating long-term interest rates.
A new Bank of England for a new Governor
James Barty, Policy Exchange's Senior Consultant for Financial Policy and author of recent Policy Exchange reportReform of the Bank of England, sets out recommendations for reform from the report including ceding power to the Deputy Governors, greater external influence and hiring more people with financial experience.
Loosening purse strings
James Barty, Policy Exchange's Senior Consultant on Financial Policy, argues that the drive to increase banks' capital ratios is harming recovery and that the process should be slowed, if not reversed in some cases.