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Rivals' bank plans 'timid': Cable | |
(about 19 hours later) | |
Only the Liberal Democrats have the "vision" required to restructure the banking system, Vince Cable has argued. | |
The party's Treasury spokesman said he first urged banks to be broken up at the peak of the 2008 financial crisis, a stance now backed by President Obama. | |
Both Labour and the Conservatives have warned of the risks of the UK embarking on "unilateral" reforms. | Both Labour and the Conservatives have warned of the risks of the UK embarking on "unilateral" reforms. |
Gordon Brown has insisted banks cannot be allowed to return to the "bad old ways" of bonus-driven speculation. | |
The prime minister's comments, made in his monthly press conference, came as City minister Lord Myners hosted a meeting of policymakers in London looking at how to restructure the industry to ensure a future banking crisis does not trigger a global recession. | |
'No ducking' | 'No ducking' |
In a speech to the think tank Demos, Mr Cable argued a radical overhaul could not be "ducked" any longer if the far-reaching changes to the British economy that are needed to secure future growth were to happen. | |
He identified bank reform as one of the "pillars" of the party's economic policy for the election, alongside a credible deficit reduction plan, building a sustained recovery and making the tax system fairer. | |
I see, at present, no evidence that the government or the Conservatives have any vision of banking beyond the immediate crisis Vince Cable, Lib Dem Treasury spokesman class="" href="/2/hi/uk_news/politics/8478251.stm">Brown rejects Tory deficit pressure | |
While both the main parties had "studiously avoided" the issue until recently, he said that the Lib Dems were committed to creating a more stable, competitive and "socially productive" banking system. | |
He called for a "version" of the Glass Steagall Act - the Depression-era US law which separated retail and investment banking activities until its abolition in the 1990s - to be passed in the UK. | |
He also reiterated the need for banks underwritten by the taxpayer to contribute to the cost of state guarantees through a tax on their profits. | |
"Now that President Obama has taken on the issue of breaking up the banks on his side of the pond, it is time we do the same in the UK. | |
"I see, at present, no evidence that the government or the Conservatives have any vision of banking beyond the immediate crisis." | "I see, at present, no evidence that the government or the Conservatives have any vision of banking beyond the immediate crisis." |
Mr Obama's proposals, which need congressional approval, would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund. | Mr Obama's proposals, which need congressional approval, would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund. |
They would also bar institutions from proprietary trading - investing to make a profit for themselves rather than on behalf of customers. | They would also bar institutions from proprietary trading - investing to make a profit for themselves rather than on behalf of customers. |
While stressing their support for the underlying principles of the Obama approach, both main parties have said the UK market is different and requires different solutions. | While stressing their support for the underlying principles of the Obama approach, both main parties have said the UK market is different and requires different solutions. |
Wrong focus | Wrong focus |
Labour says breaking up British banks is not appropriate as they are global and curbs on their activities will force them overseas. | |
Chancellor Alistair Darling has said reform should not focus on the structure of banks but controlling risk and ensuring firms held sufficient capital to cover their liabilities. | |
His Tory counterpart George Osborne says he backs "Obama-style" regulation, as opposed to the "failed model" supported by ministers, but says reforms must be agreed globally. | |
He has ruled out a British replica of the Glass-Steagall law as "crude", saying he will not back any proposals which damage the City's standing as one of the world's leading financial centres. | |
In his speech, Mr Cable also called for much more choice for bank consumers through new "local" lenders, credit unions and mutuals catering for the financially excluded, and a Post Office bank. | |
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