I'll end banks' irresponsible risk-taking, says PM
Friday 13 February 2009
Gordon Brown vowed today to root out "irresponsible and excessive" risk-taking in Britain's banks.
The Prime Minister said the public was "rightly" angry about the way the banks had operated - leading to a multi-billion pound bail-out by the taxpayer - and promised that the regulatory system would be overhauled.
Speaking at a question-and-answer session at Coventry University, he said that in future there should be no rewards for short-term deals.
"The reason people are angry in this country, rightly, is that we know in every other area what is valued is hard work, it is effort, it is showing enterprise, it is taking responsibility," he said.
"It should never be irresponsible risk-taking, and irresponsible and excessive behaviour and that is what we have got to root out.
"They are stewards of people's money and they should not be speculators in people's money. What we have got to do now is to make sure that in the lending the banks do that they are absolutely responsible.
"We will do everything we can to repair the banking system and make sure that people can have the confidence that is necessary for our economy to flourish."
His comments came at the end of a week which has seen seen public attention focused on the role of the banks in the current economic crisis with a series of high-profile hearings by the Commons Treasury Committee.
The Prime Minister's former adviser Sir James Crosby was forced to step down as deputy chairman of the Financial Services Authority amid controversy over his part in the collapse of HBOS when he was the bank's chief executive.
Mr Brown said that in future he wanted to see banks penalised if they paid out bonuses in an inappropriate manner.
"There should be no bonuses for short-term deals. We should bring in the regulator to say that if you try to do this we will mark you down as banks and not allow you to trade in the way that you want to trade," he said.
"We are creating a system for the future that is based on long-term performance not short-term rewards."
Earlier, during a visit to the Corus steel plant in Corby, Northamptonshire, where 400 staff have just been given a week off on half pay, Mr Brown said it had been necessary for the Government to act to prevent the collapse of the banks.
"It's like a power cut. The banks have seized up. They won't lend to each other and so we have got to step in," he said.
"The banking collapse is global. It's the first time it has happened and we have got to prevent it from affecting the real economy."
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