Morning:
9°c
Alistair Darling today promised tighter regulation of the financial system and warned bankers that the return of the bonus culture risked fuelling another crisis.
The Chancellor said it would be "disastrous" if the City slipped back into its previous ways of excessive risk-taking and lavish rewards - seen by many as a trigger for the meltdown in the global economy.
"There are people who are too complacent in my view," he said. "They need to be brought back to earth."
Darling's remarks followed indications that banks such as Goldman Sachs and Barclays Capital are preparing to hand out bumper bonuses to staff this year despite the recession.
Darling also indicated that next week's White Paper on banking reform will include new powers for both the Bank of England and the Financial Services Authority as he played down talk of a damaging power struggle between Bank Governor Mervyn King and FSA chairman Adair Turner.
"It is not a turf war," he said. "It is a question of ensuring they both do the job they are set up to do and both do it effectively.
"They are not competing with each other. They are complementary."
On bankers and the return of the bonus culture, Darling said: "It is not them I am particularly worried about. It is the rest of us who are being affected by it.
"The individuals concerned 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."
However, in a sign that there is very little the Government can do to rein in bonuses, the Chancellor admitted that the White Paper will not propose a cap on pay.
Darling said: "You can't have a pay policy in legislation.
"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 is all over, that they don't need to bother."
The British Bankers' Association defended the industry and said it was working with the FSA to ensure bonuses are "appropriate and reward long-term success".
Spokeswoman Lesley McCleod said: "Bankers are not complacent and recognise the need for change. We understand the legitimate concerns of the public and the Government and are determined not to repeat the mistakes of the past."
Darling indicated that the White Paper will retain the tripartite regulatory system, which divides responsibility between Bank, FSA and Treasury. "It is very important, from the Government's and the regulators' point of view, not only to act together, but that we are seen to act together," he told The Independent. "In any healthy democracy there is bound to be a discussion. It would be very odd if three people never disagreed."
The Bank is expected to be given the role of stopping booms becoming bubbles and the FSA will be told to take a pro-active role in preventing bonuses which reward short-term profits.
Reader views (26)
The Government borrowing to get UK out of the recession that was caused by same Bankers, is just laughable.
Difference now is that general population via Internet usage is beginning to cotton on to the sham, but until another system evolves we are well and truly mucked.
- William, Hay~Heath UK
We have a minimum wage, i personally feel there should be a maximum wage too, including bonuses.
- Stan White, leeds
My DARLING, how does one bring back to earth people who have never lived on this planet but only in the stars ?
- Edouard, Toulouse, France
These bankers are no better than theives. Have we not leanred?
- Ant, London
Darling needs to be shot into space.
- Adam, London
Quote: Bernard Parke, GUILDFORD. Banks are not charities.
-----------------------------------
No; taxpayers are.
- Mickinlondon, london.
All talk again Alister.
- Shallotman, Basildon
Actions not words.
- Mike, London
'Bankers need to be brought back to earth' says Alistair Darling-along with Politicians. Was it not the lack of regulations that got us into this mess! "Light touch regualtion" said Flash Gorden a few years ago. Curb the Politicians expenses. Practise what you preech.
- Frank, Copenhagen, Denmark
We have to ask ourselves why the government has failed to bring the bankers into line, they can't because they are not in control, the bankers are. The banks and financial institutions are calling the shots, governments just do as they are told - this would explain everything!. The bankers really are "The Masters of the Universe" and it's time that they were put back in their place.
- Mark Burton, St Ives. Cambs
Dont forget, there should never have been a banking crisis as Gordon Brown had "abolished boom and bust"! He truly believed he was right and ignored Eddie George's warnings in 2004, Gordon brown did not take any preventative action to curb banking excesses, allowing this to blow up years later.
Do not forget that the lack of leadership from government is as important as the bankers actions. They legislate the framework within which banks operate.
- Dave Davies, Basingstoke, Hants
Banks are not charities !
- Bernard Parke, GUILDFORD
To have any bite, you first need to quantify "excessive risk-taking and lavish rewards".
Given that this government has taken excessive risks with our economy and lavish rewards for themselves, are they qualified to make such a judgement on others?
I dont think so.
- Dave Davies, Basingstoke, Hants
Pot, kettle and most definitely black spring to mind.
- Bob, Cheam
Darliong says
"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?'"
Maybe every single minister should ask him/herself a similar question. GB and AD certainly have no idea about how to run a hot dog stall, never mind the British economy.
- Antoine Desmoines, London, UK
"You can't have a pay policy in legislation," says Darling.
Well Darling, yes you can. It's called a progressive tax system and can be used to curb the wildest excesses of these greedy bankers. It raises much needed revenue for the rest of us who have suffered at the hands of bankers and spineless politicians and sends a message that greed will once again be viewed as a bad thing.
I have no doubt that Darling and Brown will not do anything to upset the city. Why? Because both are eyeing the post politics pay day with directorships at exactly the same banks they are currently keeping afloat. THIS aspect is the most disturbing of all, showing a clear conflict of interest in favour of bankers and AGAINST us, the taxpayer.
- Bobby Smith, Surrey
It is cloud cuckoo land Darling and his "psychologically flawed" (copyright T. Blair) boss, Brown who need to be brought back to earth.
- Matt, London, UK
Yes the parasitic bankers, and don't forget the hedge funds, should be brought back to earth but who was it who allowed them to take off to incredible heights of avarice in the first place? Darling and Brown of course!
- Richard Kennard, Welling
So what Darling's basically saying is that the banks will be allowed to operate unfettered and unregulated as they were - before they sunk the world into a global, economic crisis!...Who does he think he is kidding??
- Ali Sichilongo, London
Is he serious?
I saw on TV last night that Sweden sued their banks directors who incurred hefty fineds during their banking crisis. So Alistair, when are the trials starting for Goodwin, Hornby and the many other exec and non exec board directors and senior managers?
In every other profession, this level of gross negligence and corruption would mean being struck off and paying a hefty fine or imprisonment. It would be hard for say a doctor to commit a level of negligence that would bring a country down unless he spread swine flu and yet many professionals have being censured by fines or being struck off for doing far far less damage than the likes of Goodwin and Hornby and the many other nameless bank directors.
- Jim, London
Fine one to be talking about bringing bankers back to earth he and his fellow crooks at the House of Frauds should get back to planet earth first and lead by example.No doubt if they do tighten bankers bonuses etc it will exclude Scottish ones like RBS who are still acting as if on a different planet?
- Mike, London England
When will we be rid of this hideous Government?,-Darling not only looks stupid he talks it too,-I've noticed that several ministers have played about with their looks,giving them an almost satanic appearance,-I think its the health minister,who's name escapes me,has had his eyebrows sculpted,-they are just a bunch of freaks."Election Now"
- Jacob, Canterbury England
Let's bring the politicians down to earth before we start on the bankers. We have to get our priorities right. Unless we get the correct( non greedy non snouts in the trough) politicians how can they lay down the rules for the rest of society. Darling is amongst the worst offenders and should be the first to go. Roll on the revolution !
- E.Nuff, London
Fantastic news - bankers go back to patting themselves on the back whilst sacking, a less polite term than redundancy, junior and lower management staff. Just wait for the next round, automated cashiering. Whatever happened to good old fashioned service. How big will the fat cats bonus be when the banks are fully automated
- Johnnythedog, London
"There are people who are too complacent in my view," he said. "They need to be brought back to earth."
----
Let's start by forcing bankers to only work 9 to 5, with an hour for lunch and frequent coffee breaks; and may not work during weekends, then we can move onto the discussion of no bonus.
- Ed, London
Why don't we start by bringing politicians - Alistair and his lot - back to Earth first?!
- Billy, London
