31 Aug, 2011

Vince Cable says banking reforms will go ahead; Government sources say not before 2015 however.

UK Business Secretary, Vince Cable, has hit back at claims that proposed reforms to the banking regulatory system will damage the UK’s recovery.

Head of The Confederation of British Industry, Britain’s biggest business lobby group, John Cridland, warned earlier in the week that the Government would be ‘barking mad’ to go ahead with the reforms that are expected to ring fence banks’ retail and investment divisions. He claimed that the reforms are just a way in which politicians can be seen as being visibly tough on banks.

However, Cable responded by telling the Times that the warning that reform could be detrimental to the country’s economic recovery was “disingenuous in the extreme”.

He continued: “Banks are in a way trying to create a panic around something which they know has got to happen.

“The governor of the Bank of England and many other people have been arguing that we have to deal with the too-big-to-fail problem.

“We can’t have big global banks with balance sheets bigger than British GDP underwritten by the taxpayer; this can’t go on and it has got to be dealt with.”

However, according to the BBC, Goverment sources have reported that the reforms will not go ahead any time before 2015, although legislation to ‘split up’ leading banks may be passed before the scheduled general election in 2015. The recommendations for the reforms are expected at some point in September, however the ultimate decision as to the implementation and exact timescale will be down to the Chancellor, George Osborne.

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