Speaking at this year’s Council of Mortgage Lender’s annual conference in London today, Cable said the admission came after a dinner two years ago from the chief executive of one of the banks which is now part-nationalised.
He said: “I had dinner with a chief executive of one of the now recently part-nationalised banks and we argued for an hour about his lending practices. Finally he accepted his bank’s lending was foolish and dangerous, but he would have been sacked by his board if he didn’t lend these mortgages.”
Cable told delegates that mortgage lenders were not the only ones to blame for the current financial turmoil.
He said: “It is easy to point fingers, but the political class are just as responsible for the situation. It has pursued irrational owner-occupier aspirations with ridiculous religious fervour and now the dream has burst very painfully.”
Cable also revealed he would not be one of the voices that will call for banks and building societies to ‘pass on’ any potential base rate cuts this week.
He said: “You will all be faced with the political community instructing you to pass on any interest rate cuts to your borrowers, and you have to with tracker mortgages, but some newspapers will be ringing me up saying: ‘Give us a good, juicy quote, we’ll put you on the front page give these guys a good kicking’.
“I think I have got to the stage where I understand your problem, there obviously is a problem with funding costs. So I will not be one of the people in the queue instructing you to fully pass on the cost, because it’s not the case.”