World News - Bank reforms to go ahead - Cable
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    World News - Bank reforms to go ahead - Cable

    30 August 2011 Last updated at 23:17 ET 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".

    But Mr Cable said it was "disingenuous in the extreme" to warn that reform could damage economic recovery.

    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.

    "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.

    "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' 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.

    "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."

    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' 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.

    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.

    However, the government is under no obligation to implement its recommendations.

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    World News - Bank reforms to go ahead - Cable

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