Former British Prime minister Gordon Brown has warned that “rogue bankers” will cause another financial crash.
He said that the failure to jail them after the last crisis means that it is now “inevitable” they will start gambling again with public money.
The former labour party leader said “If bankers who act fraudulently are not put in jail with their bonuses returned, assets confiscated and banned from future practice, we will only give a green light to similar risk-laden behaviour in new forms.”
The Telegraph reports:
Writing in his memoirs, which are published next week, the former Prime Minister warned the “mistakes of the past have not been heeded” and bankers who act fraudulently must be jailed, banned from future practice and their assets confiscated.
He questioned how Fred Goodwin, the former boss of RBS, could walk away with his past bonuses “untouched”, a tax-free lump sum of £5 million and a pension of £300,000 a year after the bank collapsed and was bailed out by the taxpayer.
But he said Mr Goodwin’s conduct was “typical” of UK banking a decade ago, which he summed up as the “shameful wasting of millions of pounds”, and also heavily criticised Barclays, Northern Rock and HBOS.
Querying why there were no criminal prosecutions, unlike in other countries, he said “little has changed” since the 2008 crisis other than that “the banks that were deemed‘too big to fail’ are now even bigger than they were.”
Mr Brown also recalled how Mr Goodwin showed “not a shred of contrition” when RBS was forced to go to the public purse for help and he had prepared to resign as Prime Minister if his government’s bank rescue plan had failed.
The former Labour leader unveiled a £500 billion scheme that saw the taxpayer take large stakes in major banks in return for funds to prop up their shattered balance sheets.
However, he also used the book, titled My Life, Our Times, to state that one of his largest regrets is not having time to push through fundamental reform of the banking system before he lost power in the 2010 general election.
Mr Brown said: “If bankers who act fraudulently are not put in jail with their bonuses returned, assets confiscated and banned from future practice, we will only give a green light to similar risk-laden behaviour in new forms.”
He added: “With many banks backstopped by the taxpayers, they make their profits at least in part because of the government guarantee. The risks they are taking is often not with their money but with ours.”
Arguing that the last crisis “proved to be the turning point at which history failed to turn”, he said dividends and bankers’ pay today represent almost the same share of bank’s revenues as before the crash.
He suggested the Fraud Act should be used to tackle bankers who abuse their positions, make false representations or fail to disclose information.
Mr Brown said he first knew Mr Goodwin as an accountant involved in privatising Rosyth dockyard “but over the years I saw him change”. In particular, he highlighted the banker’s private suite at the Savoy, fleet of limousines and private jet.
“Millions of pounds were simply wasted” by RBS, he said, with spending including a £200 million annual sponsorship budget and payments to sports stars to act as “global ambassadors” for the bank.
He also claimed that Northern Rock’s directors should have gone to prison for fraudulent claims about the state of their loan book and HBOS compounded its disaster by continuing to ramp up loss-making purchases while the crisis worsened.
Latest posts by Niamh Harris (see all)
- 19 Yr Old Student Dies In College Safety Drill - July 15, 2018
- Tel Aviv: Thousands Protest Israel’s ‘Racist’ Nation-State Bill - July 15, 2018
- Democratic Senators Warn Trump Against One-On-One Meeting With Putin - July 14, 2018