PM: Irresponsible bankers should be punished

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Indy Politics

Bankers and financiers who take irresponsible risks should be "punished" for their actions, Gordon Brown said today.

Following yesterday's massive Government bail out for the banks, the Prime Minister spoke of his anger at the way some in the City had behaved.

"I am angry at irresponsible behaviour," he told GMTV.

"Our economy is built around people who work hard, who show effort, who take responsible decisions, and whether there is excessive and irresponsible risk-taking, that has got to be punished."



Mr Brown said the banks who signed up to the rescue plan would have to accept that there could be no more huge bonus pay-outs for top executives.

"The days of big bonuses are over. One of the conditions of us helping the banks is that we will have to reach an agreement about their executive remuneration," he said.

The Prime Minister attacked the way that the operations of some of the banks had left them dangerously exposed following the collapse of the sub-prime mortgage market in the United States.

"Most of this has come out of America and then affected the British banking system, but there have been abuses in our system as well and these have got to be dealt with too," he said.

"Where these guys have taken irresponsible risks, that is completely unacceptable. The problem is they didn't know what they were buying from America."



Mr Brown's words were in marked contrast to his comments yesterday in the Commons when he refused to back a call by Tory leader David Cameron to curb the pay of bank executives.

He said that he believed that the Government would eventually see a return on the £50 billion it was preparing to inject into the banks by taking shares in them - effectively a part-nationalisation.

"I actually think in the long run we will make money for the taxpayer out of these shares," he said.

"The taxpayer's interest is central to what I am doing. There is nothing for nothing. If we are going to do something, we are going to get something in return for the British taxpayer.

Despite the Government's promise of up to £500 billion in loans and share capital, worries remain that it may not be enough to stop the markets sliding and get banks lending to one another again.

The Prime Minister and Chancellor Alistair Darling will spend the next few days pushing for co-ordinated international action to restore stability to the financial sector.

"We've led the world yesterday by saying we will help rebuild the banking system," Mr Brown said. "Round the world now, other countries are looking at what we are doing."

Mr Darling flies to Washington this afternoon ahead of crucial meetings of the finance ministers of the G7 group of rich countries tomorrow and the International Monetary Fund on Saturday.

And Mr Brown will be in close contact with his European counterparts ahead of next week's EU summit in Brussels, following criticisms that last weekend's pledge to co-ordinate their response to the credit crunch has fallen apart within days.

Treasury officials are talking with UK banks today over the level of individual take-up of the Government's £50 billion recapitalisation scheme and the precise terms of the deals.

Eight UK financial institutions - Abbey, Barclays, HBOS, HSBC, Lloyds TSB, RBS, Standard Chartered and Nationwide Building Society - have pledged to increase their capital by £25 billion, but Government will pump in the funds if called upon.

The Treasury also stands ready to make at least another £25 billion available if necessary, effectively part-nationalising the banks.

HSBC has already said that, while it is eligible for the scheme, it has no plans to take up the deal, as funding could be covered by "internal resources".

Meanwhile, local authorities are pressing the Government to protect hundreds of millions of pounds of council taxpayers' money invested in Icelandic banks which are at risk due to the near-collapse of that country's financial sector.

Despite the gloom, Mr Brown was in buoyant mood last night when he attended a reception for Britain's most influential black people at the Foreign Office in London.

He won loud laughter when a mobile phone went off during the reception and he quipped: "I don't know if another bank has fallen... you'll be pleased I'm not going to be giving financial information this evening."





The Prime Minister's spokesman said that Mr Brown would be touring the country over the coming days to explain the bail out package to voters.

He will visit Birmingham later today, where he will be meeting small business representatives, and he will be travelling to the south west tomorrow.

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