The coming coalition compromise on the banks

One of the questions that most fascinates Westminster is what would make Vince Cable walk out of the coalition Cabinet. Cable might be a diminished figure and have lost standing on the Lib Dem left by pushing through the tuition fees hike, but his departure would still shift the tectonic plates of politics.

As James Kirkup blogs today, banking reform, or the lack thereof, is the most likely cause of Cable going nuclear. Cable is a firm believer that retail and investment banking need to be separated, a view that he pretty much reiterated on Marr this morning. Osborne and the Treasury are far more cautious on this front.

Everyone in government is waiting to see what the Vickers Review recommends. But I understand from sources close to the review that it is likely to suggest something that both Osborne and Cable could live with.

Vickers is said to be increasingly drawn to the principle of subsidiarisation.