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31/08/2011
CBI 'Disingenuous' Over Banking Reforms
Vince Cable has labelled a response from Britain's business leaders to new banking reforms as "disingenuous in the extreme".
The Independent Commission on Banking (ICB) on Wednesday revealed fresh banking reforms for the sector in the aftermath of the economic crisis, which many economic commentators attributed to banking deregulation in the late 1990s.
However, the Confederation of Business Industry (CBI) responded to the proposals saying it had overlooked "business and economic impacts of potential changes to the system".
The proposals include protections for taxpayers, removing their liability for any future losses or bank collapses and ring-fencing banks' retail operations. They also contain plans for depositors to get their money back before creditors, should a bank fail.
However, the CBI claimed much more work was needed to ensure that the planned changes stimulated business growth, job creation and economic recovery.
John Cridland, CBI Director-General, said: “Businesses want greater stability in the financial system but it’s not clear that the current ring-fencing proposals will deliver this, and could in fact lead to greater instability.
“These plans could result in riskier lending within the ring-fence and cause significant disruption to banks and businesses outside the ring-fence in the event of a crisis.
Responding to the CBI statemtent, the Business Secretary Vince Cable said the CBI's claims were "disingenuous in the extreme".
Speaking to The Times, the Liberal Democrat minister said: "Banks are in a way trying to create a panic around something which they know has got to happen.
"The governor of the Bank of England and many other people have been arguing that we have to deal with the too-big-to-fail problem.
"We can't have big global banks with balance sheets bigger than British GDP underwritten by the taxpayer; this can't go on and it has got to be dealt with."
The Independent Commission on Banking's final recommendations are due on 12 September.
(DW)
The Independent Commission on Banking (ICB) on Wednesday revealed fresh banking reforms for the sector in the aftermath of the economic crisis, which many economic commentators attributed to banking deregulation in the late 1990s.
However, the Confederation of Business Industry (CBI) responded to the proposals saying it had overlooked "business and economic impacts of potential changes to the system".
The proposals include protections for taxpayers, removing their liability for any future losses or bank collapses and ring-fencing banks' retail operations. They also contain plans for depositors to get their money back before creditors, should a bank fail.
However, the CBI claimed much more work was needed to ensure that the planned changes stimulated business growth, job creation and economic recovery.
John Cridland, CBI Director-General, said: “Businesses want greater stability in the financial system but it’s not clear that the current ring-fencing proposals will deliver this, and could in fact lead to greater instability.
“These plans could result in riskier lending within the ring-fence and cause significant disruption to banks and businesses outside the ring-fence in the event of a crisis.
Responding to the CBI statemtent, the Business Secretary Vince Cable said the CBI's claims were "disingenuous in the extreme".
Speaking to The Times, the Liberal Democrat minister said: "Banks are in a way trying to create a panic around something which they know has got to happen.
"The governor of the Bank of England and many other people have been arguing that we have to deal with the too-big-to-fail problem.
"We can't have big global banks with balance sheets bigger than British GDP underwritten by the taxpayer; this can't go on and it has got to be dealt with."
The Independent Commission on Banking's final recommendations are due on 12 September.
(DW)
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Northern Ireland WeatherToday:A showery start with outbreaks most frequent north of Lough Neagh and through the morning, before dwindling during the afternoon as the northwest breezes ease and brighter spells of weak sunshine prosper. Maximum temperature 8 °C.Tonight:A dry night, save for a few light showers around the coasts, with prolonged clear spells and light winds bringing a frosty dawn for many in central and southern parts. Minimum temperature -3 °C.
