Turner calls for clampdown on bank bosses
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Your support makes all the difference.Britain's chief financial watchdog last night accused the financial establishment of a "giant intellectual failure" in the run-up to the financial crisis and called for tough new sanctions on the directors of failed banks.
Lord Turner, the outgoing chairman of the Financial Services Authority, told the Parliamentary Commission on Banking Standards: "Banks are different in nature from retailers or manufacturers or hoteliers; they have the ability to make a mess of the economy rather than simply make a mess of their own businesses."
He said bank directors as a result could not simply consider their role as being to maximise returns for shareholders as a result, and added: "There have to be sanctions which are different for bankers than the normal set of rules that apply to other sectors of the economy.
"People have often said in other sectors that Britain is too unwilling to accept serial bankrupts. That is fine for, say, innovative high-tech businesses. In relation to bankers, that is a disaster."
Lord Turner, pictured, earlier warned: "In the world of those responsible for the financial system and risk management, there developed a theory (over the last 30 years) which was based upon the benefit of having efficient markets and the benefits of innovations and competing markets which was wrong. It was dangerous and a form of intellectual arrogance."
He said Britain needed to become "reasonably safe against the re-emergence" of the "delusion" which took hold of banking before the financial crisis that the system was made safe by these factors. He said: "The question is how do we design it for 25 years' time when we have another. This time it's different, this time we're cleverer."
An "explosion" of interlinked derivatives traded by banks has "the potential for creating risks that we don't yet understand," Lord Turner warned.
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