By Gonzalo Vina
Sept. 30 (Bloomberg) -- Chancellor of the Exchequer Alistair Darling blamed the “stupidity” of bankers for bringing Britain’s financial system to within hours of collapse last year.
Excessive risk-taking by bankers chasing unjustified bonuses almost forced banks to “close their doors,” Darling said, adding that tougher rules on bonuses would help prevent a repeat of the crisis.
“I am bothered about the bonus culture because it played a part in the downfall of the banks,” Darling told Labour Party activists at a meeting on the fringes of the party’s annual conference in Brighton, England late yesterday. “We have to make sure we don’t get into more problems because of the stupidity of a number of people.”
Darling told the audience that the decisions to bail out Royal Bank of Scotland Group Plc and HBOS Plc were the most difficult during his time as chancellor. Prime Minister Gordon Brown’s government pledged to support banks on Oct. 8, 2008, to prevent a meltdown in the aftermath of Lehman Brothers Holdings Inc.’s bankruptcy.
“Banks were hours away from having to close their doors,” Darling said. “We reached a point last October when banks were finding it difficult to lend to each other overnight.”
The comments came a day after the finance minister told the conference he’d speak to the heads of compensation committees this week to make sure they hold back bonuses this year ahead of legislation that is due to be introduced next year.
Labour is seeking to tap into popular anger against bankers who are rewarding themselves even as taxpayers underwrite a bailout with total potential liabilities worth 1.4 trillion pounds, equivalent to the nation’s economic output in a year.
Darling rejected calls from Labour Party activists in the audience who suggested the government establish a High Pay Commission to regulate pay. He said such proposals would be “unenforceable.”
To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net
Posts
No comments:
Post a Comment