The Chancellor Alistair Darling has ruled out tighter banking regulation - attributing the sector's collapse to a few bad apples in individual boardrooms. The Chancellor was giving his Mansion House speech to the City on Wednesday night.
John McDonnell MP, LEAP Chair, said:
"People are losing their jobs in vast numbers as a result of city speculators bringing the economy to its knees and yet Darling refuses to take decisive action to control the banking sector. He is simply setting the scene for a return of the casino economy and the bonus binge culture."
Richard Murphy, Tax Justice Network, said:
"Darling is right: we do need better people in the boardrooms of banks. More women, more trade unionists, more people who can robustly question the whole model of banking and who have the mindset to do so. Banks failed in part because of a collective myopia.
"But they also failed because investment banking was allowed to dominate retail banking. Because our basic capacity to make payment within our economy was almost destroyed by gamblers willing to stake other people's money on bets which they ensured gave them an upside and others the downside. This basic utility - the control of our money - has to be reclaimed from such people. That requires massive banking reform.
"And we have to ensure that never again can banks cut and slice debt in tax havens and sell it as good when it was anything but, with resulting cost to us all. That means bank accounts, their access to offshore, the regulatory capital dedicated to offshore banking, and the regulation of these places has to be massively reformed. Ignore any of these and the crisis will come back again, and again, and again."
Prem Sikka, Professor of Accountancy, said:
"The corporate takeover of Britain is complete. Corporate elites have unleashed economic havoc on ordinary people but have organised deeper reforms off the political agenda.
"The practices which incubated the crisis remain untouched. There are no changes to banking practices, composition of company boards, rights for depositors, mega salaries for failure, conflict of interests and light touch regulation remains the dominant philosophy. History repeats itself, first as tragedy, second as farce"
LEAP discussed the possibilities for tighter banking regulation in our May 2008 'Credit Crunch' Red Papers and again in the November 2008 Red Papers: 'The Economic Crisis'.