Bank bosses 'should be liable'

Bank of EnglandBank bosses should be personally liable for any losses made by their companies, a Tory MP has told Parliament.

Wycombe MP Steven Baker proposed a new law which, if agreed, would first claw back bonuses and then the cash of bank directors before any losses were passed to shareholders or the taxpayer.
Mr Baker said the creation of a "strict liability" for top bankers was justified because banking was a unique category of business.

He said the measures would reduce risk-taking by exposing bankers to the losses of high stakes moves.

The Financial Institutions (Reform) Bill is highly unlikely to ever become law but was accepted by MPs for further consideration without a vote.

Moving his 10 minute rule motion, Mr Baker said: "In a developed society like ours we need a vibrant, dynamic and robust means of executing payments, keeping savings - we need a good banking system.

"Unfortunately, as the Governor of the Bank of England said in 2010, of all the many ways of organising banking the worst is the one we have today.

"The essence of the contemporary system is the creation of money, out of nothing, by private banks' often foolish lending. The crisis reflected a failure of the entire system of financial sector governance. It seems to me there is an increasingly unified message coming out of the Bank of England.

"We must rise above this inadequate story of pantomime villains. Entrepreneurial error and gaming rules in the pursuit of self interest are nothing new. The system should have been able to cope.

"It is that foolish lending of new money which must be addressed. What is to be done?"
Read Full Story

FROM OUR PARTNERS