British minister attacks banks' resistance to reform

31st August 2011, Comments 0 comments

Britain's Business Secretary Vince Cable on Wednesday accused bankers of exploiting the current euro crisis to block reforms to the troubled sector.

The Liberal Democrat minister called the "special pleading" of bank lobbyists "disingenuous in the extreme" during an interview with The Times newspaper.

Cable's attack comes two weeks before the publication of a report from a commission led by John Vickers which is expected to call for the separation of banks' retail and investment arms.

Cable warned that objections to reform from major banks were becoming "louder and louder".

"It is disingenuous in the extreme to use the current context to argue against reform," he told the paper. "Banks are in a way trying to create a panic around something which they know has got to happen.

"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," he added.

Banks argue that further government regulation on the financial sector could derail Britain's snail-paced economic revival, but Cable responded that the biggest threat was of a general slowing down of western economies.

Global markets have been in a spin over fears of a deepening sovereign debt crisis in the eurozone, with major banks in the firing line if governments default on their debts.

Britain emerged from a record-length recession in late 2009 but many economists remain fearful that state austerity measures could spark a second downturn.

© 2011 AFP

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