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BoE member slams “dishonest” bank lobbying over reform

Bank of England policymaker Robert Jenkins has attacked the way banks have been lobbying to try and prevent or delay regulatory reform of the sector.

Jenkins, who is an external member of the Financial Policy Committee, believes that the latest “short-termist” lobbying tactics by banks – in warning that introducing the Independent Commission on Banking’s proposed reforms too quickly will damage the economy – is both “intellectually dishonest and potentially damaging”.

Speaking at the third Gordon Midgley memorial debate in London yesterday, Jenkins said the banks were wrong to suggest that the reforms will force them to reduce lending levels.

He said: “What you would achieve is further erosion of confidence in the banking system. And it is potentially damaging because it promotes fear for an economy which the banks are there to serve and from which they draw their livelihood. For the truth is that banks can strengthen their balance sheets without harming the economy. They can do so by cutting bonuses, by curtailing intra-financial risk-taking and by raising term debt and equity. The markets are not closed to viable banks. Their executives are closed to the need to pay the price necessary to the raise the funds needed. For the sound, well run financial enterprise the money is there.”

Jenkins says there is no need to delay the reforms to 2019, the date the Government has given as a “back-stop” to introduce the reforms, which would align the new rules with Basel III.

He said: “I know that not all bankers agree with these tactics. They should stand up and distance themselves quickly. For in pursuing its short-sighted approach the banking lobby is unwittingly making the case for more intervention in an industry which refuses to reform.”

Chancellor George Osborne recently told MPs the majority of the ICB’s proposals will be implemented through fresh legislation rather than “shoehorned” into the draft Financial Services Bill.


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. The banks lobbied for “less intrusive regulation” in the first place, saying that without it the economy would be stifled.

    Of course, history has proved them to be the disingenuous, deceitful, unaccountable, mendacious, self interested bunch of non-claw-backable bonus grabbing, money grubbing, greedy, avaricious, narcissistic, egotistical shower of politically favoured bunch of cowards they are. Allegedly.

  2. Becoming a headcase IFA 23rd November 2011 at 10:03 am

    Totally agree with Chris F that most bankers are not very nice people. Personally I think they should be stood up against a wall somewhere after having raped the country.

    This other argument about having to pay them huge salaries and bonuses to keep the talent in this country…do me a favour! Let’s test it then and see what happens. The old way has worked wonders hasn’t it?

    I would also like to see the big institutions, pension funds, unit trust funds etc, vote against these bonuses. It is unlikely to happen but more questions should be asked.

  3. Until you have state funding of political parties you are always going to have this type of lobbying. It is unfortunate that our politicians are simply not up to the job of setting laws that both protect the general public and stimulate growth as they have too many vested interests. The fact is that the bankers are spending a million pounds here and there either in direct political donations or entertainment payment which buys an awful lot of political influence and that’s the real problem that needs to be tackled sooner rather than later. You even have some of our politicians taking Non-Executive for helping out these companies in the past after they have finished their so-called service to the country. Tony Blair for example excepting $1 million pa job part-time for JP Morgan, no questions asked.

    On the subject of executive pay, I listened with interest yesterday to the head of the CBI stating that shareholders have the ultimate power over executive pay, what an absolute joke!

    Executive pay in this country has risen precisely because shareholders have no power due to the fact that the majority of shares are owned by unit trust or pension fund managers who have a vested interest in keeping executive pay high so they can also receive a high package. Without radical change to the executive pay system both in the UK and around the world we will be doomed to repeat the mistakes of the past.

    I think I’m right in saying that Barclays last year had a total bonus Pool of £1.5 billion, surely that’s money that could be lent to customers or dare I say it dividends to shareholders, but it should not be money pocketed by greedy employees on a rigged system.

    All I can say if these people are so talented that they can get jobs elsewhere in the world “I’ll book their flights for them”

  4. Wow that statement is incredible – does this mean that in future I should not believe absolutely everything that that nice Angela Knight (of the British Bankers Association) tells us about how honourable and altruistic the banks are ?

  5. Do I take it from the above comments that the Nation as a whole find banks distastful?
    Banks should be part of business and helpful to their customers, Nothing wrong with that but being self interested, opinionated and dodging law and legislation purely for their own ends and then trying to justfy their actions when things go belly up is deplorable.
    Leave the UK for foreign pastures new. After all it’s where YOUR savings and investments are. Outside of UK Tax

  6. Look, the banks have always lobbied government, and bankrolled Blair, and just see the schmoozing from the likes of Golmans to the civil service. It is not true to say that fund managers have a vested interst in voting for excessive remunerations. What;s in it for the actual fund manager? really eg the Boltons and Woodfords? We have the situation of gross exec mismanagement at C&W, yet there is still a huge payoff when they go, the problem is the remuneration comittees IMO.

  7. To Andy

    Who’s on the remuneration committee?

    If there is a representative from the shareholders it tends to be a fund manager is a normally hold the largest percentage shares!

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