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Hopes are growing in the City that tomorrow's White Paper on financial regulation will back away from creating onerous legislation for banks until after the General Election, which is expected next year.
The key proposals from Chancellor Alistair Darling, which would have set out how the authorities could control banks' balance sheets in order to prevent them failing, are now reported to be turned into consultation papers.
If that turns out to be the case it will be welcomed by bankers who had feared knee-jerk legislation in response to the crisis which saw Northern Rock and Bradford & Bingley nationalised and Royal Bank of Scotland and Lloyds bailed out by the taxpayer.
However, the White Paper is likely to contain specific rules on how much liquidity and capital banks must set aside depending on how much they are retail or investment banks.
There could also be complaints that the Government is avoiding deciding where the responsibility for banking regulation lies between the Treasury, Bank of England and Financial Services Authority.
