Darling gets tough on bankers

In an exclusive interview with the Independent newspaper, Chancellor Alistair Darling has promised a much tougher financial regulatory system to prevent a repeat of last autumn’s financial crisis.

Mr. Darling said:

“The individuals concerned [in the banks] are not operating on their own. Some are only operating at all because of very substantial support from taxpayers, who are entitled to tell the Government we must not repeat the mistakes. If they go back to the way they were – to business as usual – without asking themselves over and over again whether they understand what they are doing, that would be disastrous for them and the rest of the world.”

Questioned as to why the government white paper released yesterday on banking reform did not go so far as to cap City bonuses, Mr. Darling replied:

“Every single director of a bank should ask themselves, ‘Do I understand what the bank is doing and the risks it is being exposed to?’ As the economy begins to recover, people must not drop their guard but strengthen their guard to make sure they don’t repeat the mistakes of the past. Similarly, the regulators must keep a very close eye on what is happening and be vigilant about the risks. It is very important people don’t get the idea it [the crisis] is all over; that they don’t need to bother.”

In response to Mr. Darling’s comments, the British Bankers’ Association released a statement to stress that bankers recognize the need for change:

“Bankers are committed to the long term success of the banking industry and the UK economy. We are in favour of appropriate and effective regulation. We support rewards which recognise the long term success of the business and do not reward undue risk taking. We are committed to working with government to support UK jobs and businesses and to learn from the mistakes of the past.”