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Clean up irresponsible City, demands Brown
Joe Murphy and Paul Waugh18 Sep 2008
Gordon Brown turned on the City today, blaming "irresponsible behaviour" for the banking meltdown.
In a searing rebuke to a culture that put profit before traditional, sound practices, he said it was time to "clean up the system".
"I think we have got to look at where there has been irresponsible behaviour," he said. "I have said for some time that we need reforms in the system. I believe there is now an audience that agrees with me."
Signalling tougher regulation in future, he went on: "We need reforms in the system. We have got to clean up the financial system. We don't want these problems recurring in the future."
The Prime Minister's declaration of war on roguish elements of the City will delight Labour activists meeting for their party conference this weekend.
Allies seized on his action to boost his fight to stave off a leadership challenge. After attacks on his leadership, his spokesman said Mr Brown was too busy to be worried. "The Prime Minister is solely preoccupied with the big important issues facing the country. He is getting on with his job."
Today Mr Brown also defended his decision to act swiftly to smooth the way for the Lloyds TSB takeover of HBOS, despite critics saying it would mean less competition and therefore higher charges to customers in the long run.
"I believe we have taken not only the right action, we also have to deal with the other problems and that includes the mistakes that were made in the past," he said, stressing the need for a return to sound banking practices.
"Our determination is to do everything to maintain the stability of the financial system and to do everything to protect depositors in Britain, who need to have confidence in the banking system." He added: "I have proposed a number of things to our international colleagues, because global action is needed to deal with a global problem."
The Prime Minister is expected to use a forthcoming visit to America to lobby for action. Earlier this week he asked French president Nicolas Sarkozy to back him in demanding a European response at an EU summit next month.
Mr Brown wants new rules to make banks more open about their assets, liabilities and exposure to risk.
He is concerned that financial products have become so complex that even some bank chiefs have admitted they were not sure what the consequences would be if they went wrong.
He is also raising the role that ratings agencies should play and seeking better co-ordination between regulators.
No10 would not explain exactly what behaviour Mr Brown was referring to as "irresponsible" or made a "clean up" of the system necessary but officials said he was particularly struck that financial institutions had been "taking risks without being fully aware of the consequences". They said he had raised similar sentiments before, but acknowledged his language today was more condemnatory.
A spokesman said: "If there has been any market abuse or irresponsible lending, then it needs to be looked at by the relevant authorities."
In an Evening Standard interview, Harriet Harman said Mr Brown would lead world talks towards "greater transparency and stronger regulation". International rules were needed to stop banks moving offshore to avoid them.
