Brown: Banks need a clearer focus
Gordon Brown has said banks need a clearer focus and has called for better national and international financial regulation.
Writing in the Observer, the prime minister detailed the steps being taken by the government and regulatory authorities to change the way in which banks operate.
In the article, he spoke of the need to strike a balance between responsible lending in the housing market and the ability to provide loans to home owners.
Mr Brown said the Financial Services Authority (FSA) had been asked to look into revising the practice of lending at more than 100 per cent of house value.
He wrote: “Banks need a clearer focus on making loans to UK businesses so that they can grow and take on more staff. In order to get lending going, we must continue to develop agreements that remove the uncertainty arising from banks being unsure of their losses in return for improved lending conditions for families and businesses.”
He stated that financial institutions needed to act in the long-term interest of shareholders rather than the “short-term interest of bankers” and said that the annual bonus system would continue to be revised. Mr Brown said the steps taken to limit bonuses at RBS had laid the foundations for change in the rest of the industry.
The prime minister explained that measures were also being taken to improve governance procedures at banks. He said the board members of banks would need to have the expertise and the influence to warn of the risks being taken by the company.
Mr Brown said efforts were also being put in place to improve international regulation of banks.
He wrote: “We also need both better national and global regulation. For example, where banks are speculating, long-term capital requirements will have to be higher. All markets and all jurisdictions that want to benefit from the global economy should play by the global rules. Institutions with global reach should be regulated in a global way, not by a patchwork of national regulators.”
The White House has announced that US president Barack Obama will welcome Mr Brown to Washington on March 3rd. Mr Brown will be the first European leader to meet the new US head of state.
