LONDON - The UK Chancellor of the Exchequer, Alistair Darling, has warned bankers in an interview with The Independent newspaper of the dangers of returning to their old ways of excessive risk-taking.
Worried by signs the excessive culture was returning to the City this week, amid reports large bonuses continue to be paid, Darling warned it would be disastrous if bankers were to return to business as usual. In an interview with the newspaper, he said: "There are people who are too complacent in my view," said Darling. "They need to be brought back to earth."
Some banks are still operating only because they have been rescued by taxpayers, he added.
"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 the mistakes of the past.
"Similarly, the regulators must keep a close eye on what is happening and be vigilant about the risks. It is very important people don't get the idea it is all over, that they don't need to bother."
A new white paper being issued by the government this week sets out plans to retain the UK's tripartite regulatory system, but give more power to the three bodies to do their jobs effectively. The Bank of England is expected to be given a central role in preventing systemic risk, while the FSA will be told to take a more proactive approach to preventing bonuses that reward short-term profits.
Darling is expected to reject Bank of England governor Mervyn King's call to split up the investment and retail arms of banks, but to outline plans to make it easier to see the split between the two functions.
The week on Risk.net, December 2–8, 2016Receive this by email