We're cleaning up finance, says Brown

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The Independent Online

Gordon Brown said today that the Government would do everything it can to maintain the stability of the financial system.

The Prime Minister said reform of the financial system was needed to prevent a repeat of the turbulence seen in recent days.

Speaking in 10 Downing Street, Mr Brown said: "Our determination is to do everything to maintain the stability of the financial system and to do everything to protect depositors in Britain, who need to have confidence in the banking system."

Mr Brown said the Government had taken "the right action" over the merger of Lloyds TSB and HBOS.

He said: "I believe we have taken not only the right action, but by taking the action, we have brought more stability to the financial system."

He indicated that the Government would be bringing forward proposals to deal with shortcomings in the financial system.

"I have said for some time we need reforms in the system," he said. "We have got to clean up the financial system. We don't want these problems recurring in the future.

"I have proposed a number of things to our international colleagues, because global action is needed to deal with a global problem.

"In our own country, we will do whatever is necessary to make sure people have confidence in the system and we restore the prosperity of the country."

Mr Brown said: "We have taken the right decision and the tough decision that was necessary to protect the stability of the financial system and to protect the depositors.

"We have done so just as with Northern Rock because it was necessary to get the financial system moving forward today.

"The most important thing to remember is that the financial system is in a better position because it is more stable.

"We will deal with some of the problems that have arisen because of the irresponsible behaviour that has happened. We are cleaning up the financial system where there there have been problems and we are going to continue taking whatever action is necessary so we have a stable financial system, sound banking and companies that perform to the best of their abilities."

Asked about the prospect of major job losses at the merged bank, Mr Brown said: "There have been no announcements made about jobs. There have been announcements made about the structure of the new company, about how it will do its best to safeguard jobs.

"That will be a matter that will be discussed between workers and the employers themselves.

"The important thing is that we had to take decisive and quick action. It was the right decision, as the Northern Rock decision was the right decision."

Mr Brown confirmed that he and Chancellor Alistair Darling had discussions with those involved in the HBOS deal on the issues of competition law and the stability of the mortgage market.

But he insisted that the merger was a commercial deal between the two companies and did not involve any public money.

In a separate interview with Sky News, he said: "The issue that arose in the HBOS and Lloyds TSB deal was whether the Government was prepared to look at the competition laws and look at whether the issue of financial stability was important enough for us to say that a deal such as was being proposed was the right thing to do.

"I think we have taken the right decision. We have also insisted on assurances from the new company about their mortgage lending in the market, so that they will not reduce it. They said they will expand it.

"Obviously, in a deal which involves the legislative process, the Government has to be involved. I and Alistair Darling did talk to the parties that are involved, because it is the right thing to do.

"But this was a deal that took place between two companies. It involves no Government money.

"I think people will look back and say the Government acted in a speedy and effective way and made the right decisions for Britain.

"We have done so without having to use public money and without what we saw in the States with Lehman Brothers."