By Peter Spence & Tim Wallace
It’s wrong that people who steal from shops are jailed, but bad bankers are not held to account
Bankers who received taxpayer money during the financial crisis are not unlike shoplifters, Chancellor George Osborne has said.
Speaking at the Bank of England, he said that at the time of the financial crisis, and in the years that followed, there were no laws in place to allow regulators and lawmakers to punish offenders in the financial services sector or bring criminal charges against them.
When the manipulation of City benchmarks was revealed, “it turned out we didn’t have the laws on the statute book to deal with that scandal”, he said.
“Some criminal charges have been brought, but not as many as would have been the case if the laws were better.”
Mr Osborne compared the scandals that have plagued the financial services industry since the crisis to other forms of law breaking. “If you go and shoplift at the local WH Smiths you go to prison,” he said.
Photo: DANIEL JONES
“But if you’re the market trader on the trading floor of a big investment bank, and you rip off people to the tunes of millions of pounds, there are no criminal offences to deal with you.”
The Chancellor said that “there was a lot of totally understandable anger” at bankers, as they were in part responsible for “the biggest single economic crash of our lifetimes”.
“The idea that you can just … move on is, I think, a bit optimistic,” he added.
Sir Howard Davies, chairman of the Royal Bank of Scotland, agreed that the reputation of parts of the industry is still in tatters.
“People on the whole would prefer, in a wine bar, to say proudly that they are a banker, rather than mumble or imply that they run a brothel or something more respectable and useful. Yes, they are very concerned,” he said in a panel discussion at the same event.
“One shouldn’t exaggerate – a lot of the people work in the front line dealing with deposits and loans, and that business has gone on and it is a perfectly good, normal business.
“But the people involved in the trading activities and running the bank, are very conscious that banking did lose its way in the run up to the crisis, and have found it quite difficult to re-find that way in the period since.”
Mr Osborne’s comments came as Mark Carney, the Bank of England Governor, said that there was still progress to be made to end the problem of “Too Big To Fail”, which has meant that the taxpayer has footed the bill for banking sector losses.
Mr Carney said that the public expects that banks should be treated like any other business, where as an owner “if things go wrong, you bear the consequences of that”.
“That hasn’t been the case in the financial industry,” he admitted. The Governor also acknowledged that people wanted to see “that individuals are held to account”.
Changes are being made to address both of these concerns, he said. Speaking at the Bank’s Open Forum conference, Mr Carney said that “the era of heads-I-win; tails-you-lose capitalism is drawing to a close”.
Photo: Getty Images
“Bankers are starting to be part of the solution, as opposed to the problem,” Mr Carney told Sky News.
However, the Governor will not be recommending that the UK get too close to its bankers. Pressed to issue an up to date form of David Cameron’s 2006 call to “hug a hoodie”, Mr Carney declined.
“I don’t think you want your Governor giving that type of advice, so I suspect neither I, or my successors, will be hugging a banker,” he said. “There are [still financial bad apples], but the system is changing so that they’re going to be held to account.
“There is a lot of good in the financial sector. There are a million people across this country who work in financial services, it’s our largest exporter, it contributes about 8pc of our GDP, so there’s a lot of talent, a lot of integrity, and a lot of people doing the right things.”