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Banking reforms will go ahead, says Vince Cable | Banking reforms will go ahead, says Vince Cable |
(about 3 hours later) | |
Business Secretary Vince Cable has said banking reforms will go ahead despite a row over the speed of the changes. | Business Secretary Vince Cable has said banking reforms will go ahead despite a row over the speed of the changes. |
On Tuesday, CBI director general John Cridland said taking action to reform banks now would be "barking mad". | On Tuesday, CBI director general John Cridland said taking action to reform banks now would be "barking mad". |
But Mr Cable said it was "disingenuous in the extreme" to warn that reform could damage economic recovery. | But Mr Cable said it was "disingenuous in the extreme" to warn that reform could damage economic recovery. |
Ensuring taxpayers are not liable for any future losses or bank collapses and ring-fencing banks' retail operations are among the recommendations. | |
Anxieties about the big financial institutions were "all the more reason for grappling with this issue", Mr Cable told the Times. | Anxieties about the big financial institutions were "all the more reason for grappling with this issue", Mr Cable told the Times. |
He said: "It is disingenuous in the extreme to use the current context to argue against reform. | He said: "It is disingenuous in the extreme to use the current context to argue against reform. |
"Banks are in a way trying to create a panic around something which they know has got to happen. | "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. | "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." | "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." |
'Risking recovery' | 'Risking recovery' |
The Liberal Democrat minister's comments came after attacks on the proposals from CBI director general Mr Cridland and British Bankers' Association chief executive Angela Knight. | The Liberal Democrat minister's comments came after attacks on the proposals from CBI director general Mr Cridland and British Bankers' Association chief executive Angela Knight. |
"From now on, the UK's efforts must be focused on the economic recovery," Mrs Knight said. | "From now on, the UK's efforts must be focused on the economic recovery," Mrs Knight said. |
"This means allowing the banks to finance the recovery first, pay back the taxpayer next, and only then turn to further regulatory change. | "This means allowing the banks to finance the recovery first, pay back the taxpayer next, and only then turn to further regulatory change. |
"If more regulation remains at the top of the list, then this will only have the affect of risking the recovery which is so essential to our future." | "If more regulation remains at the top of the list, then this will only have the affect of risking the recovery which is so essential to our future." |
In comments reported in the Financial Times, Mr Cridland said: "Taking action at this moment - this moment of growth peril, which weakens the ability of banks in Britain to provide the finance that businesses need to grow - is just to me barking mad." | In comments reported in the Financial Times, Mr Cridland said: "Taking action at this moment - this moment of growth peril, which weakens the ability of banks in Britain to provide the finance that businesses need to grow - is just to me barking mad." |
'Ring-fenced' | 'Ring-fenced' |
The Independent Commission on Banking's final recommendations are due on 12 September. | The Independent Commission on Banking's final recommendations are due on 12 September. |
In its interim report published in April, the banking commission recommended ring-fencing banks' retail operations from their investment banking arms. | In its interim report published in April, the banking commission recommended ring-fencing banks' retail operations from their investment banking arms. |
It also said that taxpayers should not be liable for future losses, and that depositors should get their money back before creditors. | It also said that taxpayers should not be liable for future losses, and that depositors should get their money back before creditors. |
The commission was set up by the government last June to review the UK banking sector after bailing out some of the UK biggest banks during the financial crisis. | The commission was set up by the government last June to review the UK banking sector after bailing out some of the UK biggest banks during the financial crisis. |
However, the government is under no obligation to implement its recommendations. | However, the government is under no obligation to implement its recommendations. |