Why we must tune in regularly to make sure we are up-to-date on the latest shifts in Tory policy on the banks

Lord Paul Myners, who is rapidly becoming Labour Peers’ favourite Ministerial performer at Lords’ Question Time, was at it again this afternoon.  When Lord Bilimoria, whom he squelched on a previous occasion, put it to him that:

“It is reported that the Shadow Chancellor, George Osborne, agrees with President Obama’s proposals for reform. Do the Government also agree with President Obama’s reforms and do they intend to implement them?”

The magisterial response was:

“I always welcome the comments of the noble Lord, Lord Bilimoria, from the Cross Benches. I hesitate to correct him but last Thursday evening Mr George Osborne welcomed President Obama’s statement and by Friday morning he had decided that he no longer welcomed it. We must tune in regularly to our wirelesses to ensure that we are up to date with the Tory thinking on this and so many other matters.”

He then went on to point out:

“There are aspects of the Obama proposals which clearly make a considerable degree of sense for the American situation with large investment banks. There are also concepts around the levy which are commendable and on which we and other G7 countries are working to ensure that in the future the banking system is more resilient and, if there is failure, that failure is borne by the shareholders, the subordinated creditors and the management of the banks. However, the Obama proposal is not necessary in this country; we have already taken the appropriate actions.”

The remaining exchanges were as follows:

“Lord Clinton-Davis: What discussions have taken place between the Obama Administration and the Government to ensure that there is an international response to the banking crisis?

Lord Myners: Banking resilience, regulation and capitalisation are high on the agenda for the G20. We are in regular contact with G20 countries. I met officials from the Obama Administration on Monday to talk about this and other matters.

Lord Roberts of Conwy: Does the noble Lord agree that some of the banks have their priorities totally wrong? They give management top priority, deal last with the customer and God help the shareholder in between.

Lord Myners: The noble Lord says something very perceptive and correct. Last week I suggested in the House that banks which follow policies on bonuses that were perceived to be reckless would risk alienating their customers, who would choose to move their business. I urge UK banks, in particular, to be able to evidence that they have exercised real restraint and that bonuses reward smart decisions made by good people, with the overall prosperity of the franchise in mind, rather than rewarding reckless gambling or entirely fortuitous external circumstances.

The Lord Bishop of Chester: My Lords, is the Minister confident that those banks in which the Government have a very large shareholding have entirely complied in their own decisions with what he has said to us?

Lord Myners: The decisions about bonuses at Lloyds Banking Group and RBS have not been made but we have already been very clear that UK Financial Investments on behalf of the taxpayer will take a very active interest in this area. I am much encouraged by the comments of Mr Stephen Hester, who I think is doing a very good job at Royal Bank of Scotland, that he will not recommend or seek any bonus payments beyond those which he believes are absolutely necessary to protect the bank, and in so doing protect the value of the taxpayer’s investment in his bank.

Lord Newby: The Minister has just said that the Government have already taken appropriate action in respect of the banks but yesterday, speaking to the Treasury Select Committee, the Governor of the Bank of England said:

“We cannot allow ourselves to be kept hostage to institutions that are so big”,

and he appeared to support the Obama proposals. Why do the Government think the governor is wrong?

Lord Myners: The governor said many things yesterday with which we are in complete agreement and he is supporting the moves we are taking to improve the strengths of the banking system. There is no evidence that size in itself was the source of individual bank failures. Large banks failed, but so did small banks. We need to ensure that the totality of the banking system is strong and that will be addressed by higher capital, requirements for much higher levels of liquidity and the concept of living wills, which will require banks to put in place arrangements that will allow the failing part of a bank to be isolated and separated from the remainder of the bank without imposing consequential claim on the taxpayer. The taxpayer should never, ever again be expected to bail out the folly and mischief of bad decisions made by bankers.”

3 thoughts on “Why we must tune in regularly to make sure we are up-to-date on the latest shifts in Tory policy on the banks”

  1. Does any passing conspiracy “theorist” expect Geo Osborne to dodge the MI6 bullets should Cameron win an election?

    Presumably there are still patriots in that organisation.

  2. Paul: Doddy might have “issues” re issuing banknotes, let alone the aspects where Osborne shows some signs of being able to ape the numerate, albeit inconsistently.

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