The answer is yes, because we need banks to play a central part in the country's economic recovery and therefore contribute to a broader, social recovery of the sort campaigners outside St Paul's would like to see. To this end, Diamond was, on Thursday night, positioning banks as part of the solution, rather than the problem, and recognised that simply making money by fuelling recovery is not enough. Banks have to change. And that's the tricky bit.
Don't for a minute think that Diamond and his counterparts are about to abandon the profit motive or compromise shareholder value. But to re-enter polite society, banks need to take society into account when faced with business decisions. "How will this look?" was a question rarely, if ever, asked inside banks when the chance to make short-term profits and bonuses was available. Diamond is now saying that culture of short-termism, otherwise known as greed, will change and that long-term shareholder value requires long-term decisions because short-termism creates crises of the sort we're all suffering from now.
Actions speak louder than words, however, and the biggest challenge of all of this will be how banks prove they've changed. How can we measure if banks are becoming better citizens? Not screwing clients is one, taking less pay is another and lending more to small businesses another. On the Telegraph website Stephen Hester, the chief executive of Royal Bank of Scotland, prostrated himself in front of small businesses, offering any credit-worthy application up to �250,000 credit with no up-front or early redemption fees and at low rates of interest. If banks are changing then at the very least we should encourage them, while requiring evidence of that change. This week has been a start.
Banks should be careful what they wish for
If banks don't change themselves, society will expect others to do it for them. It was therefore heartening to hear the refreshingly simple approach to regulation that Sir Mervyn King is planning when the Bank of England takes over regulation, probably in 2013.
At a Parliamentary committee on Thursday he summed it up in an imagined conversation with a bank chief executive thus: "Look, frankly, we don't understand why your organisation needs to be so complex. We can't work out what you are doing, so you're going to have to change it. You haven't broken a rule, but too bad, you've got to change it."
Bankers have long sought a more direct and mature relationship with their regulator rather than the "kids with clipboards" approach of the Financial Services Authority. It's certainly going to be more direct and a lot more blunt. Sounds like they should be careful what they wish for.
damian.reece@telegraph.co.uk
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