City Minister Lord Myners has defended the UK’s handling of the banking crisis and insisted the UK should not follow US president Obama’s
plans to separate retail and investment banking.
Last week, Obama announced “the Volcker rule” which will limit the scope of banks and ensure that no financial institution that contains a
bank will own, invest in or sponsor hedge fund or a private equity fund.
He said: “We have seen in recent weeks an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people.
“So if these folks want a fight, it is a fight I’m ready to have. My resolve is only str engthened when I see a return to old practices – when I see
soaring profits and obscene bonuses at some of the very firms claiming that they can’t lend more to small business and they cannot keep credit
card rates low.
“It is exactly this kind of irresponsibility that makes it clear that reform is necessary.”
Myners told the BBC that Obama’s plans are specific to the US economy and the UK Government will not separate retail and investment banking. He says: “He is taking the right policy responses for America and we have taken the right res ponses in the UK.”
Conservative Shadow Chancellor George Osborne has supported Obama’s plan, saying a Tory Government would push for a global deal to separate banking functions. He told the Financial Times the reforms are “definitely something we think needs to be done”.
Liberal Democrat Shadow Chancellor Vince Cable says: “Obama’s proposals to prevent the worst elements of proprietary trading are welcome but this is merely a halfway house.
“We must break up British banks to ensure that taxpayers are not forced to underwrite unnecessary risks and to make the system more competitive.
“What is clear is that we would not be acting alone – we are already lagging