Darling warns risk-taking bankers

Jul 4 2009 by Iain Laing, The Journal

CHANCELLOR of the Exchequer Alistair Darling promised tighter regulation of the financial system, and warned that bankers who take excessive risks will be “brought back to earth“.

Mr Darling indicated that next week’s banking reform White Paper will include new powers for the Bank of England and Financial Services Authority to prevent a repeat of last autumn’s meltdown.

Amid signs of the return of the bonus culture in the City of London, he warned that it would be “disastrous” if bankers thought the crisis was now over and they could go back to their old ways.

“There are people who are too complacent in my view,” said Mr Darling. “They need to be brought back to Earth.

“If they go back to the way they were – to business as usual – without asking themselves over and over again what they are doing, that would be disastrous for them and the rest of the world,” he said.

“As the economy begins to recover, people must not drop their guard but strengthen their guard to make sure they don’t repeat mistakes of the past.”

Mr Darling played down reports of a turf war between Bank of England governor Mervyn King and the FSA, led by Lord Turner, over who will wield powers to regulate the banks.

He indicated the White Paper will retain the “tripartite” regulatory system, which divides responsibility between the Bank, FSA and Treasury and said the Bank and FSA will both get “new tools” to do their jobs effectively.