City Minister Lord Myners: Banking System Was Close to Collapse

City Minister Lord Myners attacks bankers for greed and arrogance

A furious onslaught on banking’s “masters of the universe” has been unleashed by Gordon Brown’s City Minister.

Too many top bankers fail to realise they are grossly over-rewarded and have no sense of society, Lord Myners says in an interview with The Times.

With figures yesterday pointing to a longer and deeper recession than feared, lasting into 2010, Lord Myners says that banks have been mismanaged and delivers the strongest attack so far on those responsible.

He also reveals that the banking system was close to collapse before the first bailout was announced.

“We were very close on Friday, October 10. There were two or three hours when things felt very bad, nervous and fragile. Major depositors were trying to withdraw – and willing to pay penalties for early withdrawal – from a number of large banks.”

Lord Myners says that there will have to be fundamental changes in the way that banks operate and that “the golden days of huge bonuses in the investment banking arms are gone”.

He calls on banking boards and shareholders to stamp on reckless behaviour of bosses and adds that if people have committed crimes they should be prosecuted. Lord Myners says: “I have met more masters of the universe than I would like to, people who were grossly over-rewarded and did not recognise that. Some of that is pretty unpalatable.

“They are people who have no sense of the broader society around them. There is quite a lot of annoyance and much of that is justified. Let us be quite clear: there has been mismanagement of our banks.”

The 1.5 per cent fall in national income between October and December, announced yesterday, was the biggest decline experienced since 1980, when Britain was fighting soaring unemployment and inflation at the beginning of the Thatcher era. The statistics led to dire predictions of the worst drop in growth in a calendar year since the Second World War.

Lord Myners’ attack comes days after Gordon Brown vented his anger at Sir Fred Goodwin, the former Royal Bank of Scotland chief executive, and the “irresponsible risks” taken by the bank.

Barclays chief executive John Varley was last night under extreme pressure after shares in the bank fell for a ninth day running.

Barclays has lost 73 per cent of its stock market value during the last 12 trading sessions and an increasing number of City analysts believe he may be forced to quit.

January 24, 2009
Philip Webster, Rachel Sylvester and Alice Thomson

Source: The Times

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