World must follow my example, says Gordon Brown
Saturday, 11 October 2008

Gordon Brown today calls on nations across the world to follow Britain in its "ground-breaking" moves to save the banking system, reports The Times

The Prime Minister, writing in The Times, urges other governments to put money into struggling banks and offer similar guarantees worth hundreds of billions to persuade the banks to start lending to each other again.
 
Amid indications that the United States is considering such moves, Mr Brown calls for a global solution to a global problem. He says that he never expected to find himself taking a government stake in banks but that countries had to abandon "outworn dogmas" and embrace new solutions.
Wall Street suffered a day of dramatic losses amid continued fears of recession. The Dow Jones fell below 9,000 for the first time in five years, down 7 per cent at 8,579. Shares in London were also down, with the FTSE 100 dropping 53 points to 4,314, a new four-year low. However, HBOS shares leapt 31 per cent as traders became more confident about the impact of the Government's £500 billion bailout package.
 
Mr Brown called for governments to adopt cross-border rules on transparency and the highest standards of conduct to guard against irresponsible risk-taking. A new system of supervision should also be introduced to cope with the huge flows of capital between financial institutions.
 
The Prime Minister said he shared the public's anger at the damage the banks had inflicted on the economy. "I am angry at irresponsible behaviour," he said. "Where there is excessive and irresponsible risk-taking, that has got to be punished." Banks that signed up to the rescue plan would have to accept there could be no more huge bonus payouts. "The days of big bonuses are over. One of the conditions of us helping the banks is that we will have to reach an agreement about executive remuneration," he said.
 
Mr Brown's promises were undermined, however, when it emerged that the Financial Services Authority had no immediate plans to crack down on bonuses or to issue a code of conduct for banks. The Centre for Economics and Business Research predicts that City workers are likely to receive £3.5 billion in bonuses this year, compared with last year's £8.5 billion.
 
David Cameron, the Conservative leader, said that if a bank was going to take taxpayers' money it would be wrong for its senior executives to get a bonus this year. Nick Clegg, the Liberal Democrat leader, said that the Government should go farther and remove those executives who had caused the problems.
 
Tony McNulty, the Employment Minister, yesterday became the first minister to admit that Britain was heading for a recession. Ministers said contingency plans were being drawn up to cope with large-scale unemployment, including more "rapid response" teams to be sent to the worst hit areas.
 
The International Monetary Fund said that it was ready to help countries hit by the global credit crunch and had activated an emergency financing mechanism first used in the 1990s Asian crisis.
 
US Treasury officials indicated yesterday that the Bush Administration was considering taking stakes in many American banks.
 
In Europe, governments appeared cautious about Mr Brown's call for "a concerted approach" to get credit flowing. EU treasuries have been impressed with the British plan as a response to the British predicament. They are uncertain, however, about making a general commitment rather than acting case by case. A guarantee was agreed yesterday by Belgium, France and Luxembourg to underwrite all borrowing by the cross-border Dexia bank for the next year. But Christine Lagarde, the French Finance Minister, who announced the plan, said that such a scheme was not required for all French banks.
 
Italy passed a decree supporting its banks through a part-nationalisation, although no explicit amount of funding was mentioned. It said that the move did not amount to a rescue fund and banks would be offered the money case by case.

Comments Add New
Write comment
Name:
Email:
  We don't publish your mail. See privacy policy.
Title:
Please input the anti-spam code that you can read in the image.