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Is it time to lay off the banks?

May 9, 2009 by admin  
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Nobody can deny that over the past year and a half the UK’s banking industry has taken a real battering from all sides, with consumers, government officials, regulators, and campaign groups having really laid into the banks, accusing them of everything from irresponsible lending practices to failure to control bonus levels paid to executives.

Banks have been made to take a large portion of the blame for the ongoing financial crisis, and the situation has been made worse by the fact that many have had to rely on taxpayer’s money to bail them out of the problems that they have found themselves in. On top of this, consumers have lost trust in banks and building societies after a series of collapses and mergers that has left many wondering whether their money is even safe in these financial institutions.

However, one government official has suggested that whilst the banks undoubtedly deserved the hard time they have been given recently it is now time to back off and give them a break.

The Business Secretary, Lord Mandelson, has apparently said to colleagues that it is time to cut the banks a break because they are an integral part of the successful recovery of the UK’s battered economy. He said that the economy now needed banks to succeed, and that the banking industry needed to be offered support rather than continued criticism from all sides.

Even the Prime Minister, Gordon Brown, has done his fair share of slating the banking industry, stating that banks paid huge bonuses to certain staff and that they took too much risk when it came to lending, plunging the nation into hot water and leaving the financial sector in the state that it is in now. Lord Turner from the has blamed poor regulation for the problems that are being experienced in the financial sector now, and has promised to improve regulation so that the nation does not find itself in this sort of mess again in the future.

Speaking up for the banks, Lord Mandelson recently said: ‘The banks have received a well deserved bloody nose from public opinion and government, and given the impact on business and jobs I’m hardly one to sympathise. Stronger regulation requires more transparency, less complexity, fewer big bonuses and better corporate governance. But as this framework falls into place, and given the new generation of executives, banks need the space and time to get on with their work. That’s not simple but it’s the key to getting us out of the hole they have put us in.’

He went on to state: ‘My message would be, “Fine, we have had a good bashing of the banks, we have put in place the measures to change them, we are going to make them more transparent and we are going to strengthen their internal corporate governance as well. What we really need banks to do now is to get on with being banks – the sooner they do that, the better.’

Tags: huge bonuses, government officials, Lord Mandelson, banks, Financial Services Authority, Ethical banking, certain staff

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