Cable hits back over banking reform row
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Business Secretary Vince Cable has insisted that banking reforms in the UK must go ahead despite concerns over the speed of the changes.
Cable hit back at concerns from the likes of CBI director John Cridland and British Bankers’ Association chief executive Angela Knight, both of which have warned that the reforms could seriously impact any economic recovery.
Cable has said such warnings are “disingenuous in the extreme” and that anxieties about the big financial institutions were “all the more reason for grappling with the issue”.
The reforms are designed to ensure that taxpayers are not liable for any future losses or bank collapses, while ring-fencing retail operations is also amongst the proposals.
Cable said: “Banks are in a way trying to create a panic around something which they know has got to happen.
“The governor of the Bank of England and many other people have been arguing that we have to deal with the too-big-to-fail problem.
“We can’t have big global banks with balance sheets bigger than British GDP underwritten by the taxpayer; this can’t go on and it has got to be dealt with.”
BBA chief executive Angela Knight has called for the focus to be on the economic recovery rather than banking reform at this stage.
She said: “This means allowing the banks to finance the recovery first, pay back the taxpayer next, and only then turn to further regulatory change.
“If more regulation remains at the top of the list, then this will only have the affect of risking the recovery which is so essential to our future.”
Meanwhile, speaking to the Financial Times yesterday, CBI director general John Cridland labelled the move as “barking mad”.
He said: “Taking action at this moment - this moment of growth peril, which weakens the ability of banks in Britain to provide the finance that businesses need to grow - is just to me barking mad.”
The Independent Commission on Banking’s final recommendations are due on September 12.
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