The Prime Minister has said he wants responsibility in banking, right to the top. The National Association of Pension Funds wants bonus clawbacks from the people who made the related trades. There’s endless talk of the irresponsible culture in banking. All that is addressed by my last bill.
Nick Robinson just mentioned politicians trying to catch up with people’s anger. I guess he has not spotted my proposed measures to make directors and staff of financial institutions liable for the consequences of their own actions. My last bill would:
- enforce strict liability on directors of financial institutions
- enforce unlimited personal liability on directors of financial institutions
- require directors of financial institutions to post personal bonds as additional bank capital
- require personal bonds and bonuses to be treated as additional bank capital
- make provision for the insolvency of financial institutions
- establish a financial crimes investigation unit
There’s no way to regulate away the consequences of leaving in place moral hazard in the financial system. As one ex-trader said earlier today, people are constantly calculating risk and reward and the rewards are huge. They should therefore carry their huge commercial risks too. If the taxpayer is due to take the risk, players in the financial system will undoubtedly make reckless decisions.
There’s no mystery why the culture in banking is the way it is. The people involved do not have liberty and responsibility under the law. They have licence to be reckless. That’s why I have been campaigning against injustice in the financial system as a priority.