Clegg calls for nationalisation of banks
Thursday, 12 February 2009 12:00 AM
By Jonathan Moore
Liberal Democrat leader Nick Clegg has called for a temporary nationalisation of Britain's weakest banks.
In a speech to the Institute for Public Policy Research (IPPR) today he also said Britain had to change the way it ran its banks.
"A few half-hearted apologies from the bankers and regulators, the architects of this disaster, is not a solution," he said.
"We cannot simply patch up the old system."
He said there had to be a change to the bonus culture currently in place, replaced by a more long-term assessment of success.
"Never again must we allow banks to chase short-term reward at the cost of long-term stability," said Mr Clegg.
"We need to cut through the nonsense about bonuses and stop them, right now, at board and senior management level.
"Banks can no longer justify a system of pay that destabilises the financial system.
"Board members should be interested in the long term survival of a bank so they should not be paid on the basis of short term success."
He said Britain needed to look at the American system introduced in the 1930s to mend their broken banks.
There should be a separation between investment banks and retail banks so those who choose to gamble on markets should not risk the savings of ordinary people.
"Individual banks should have to make a choice," said Mr Clegg.
"Either they accept close regulation, an end to the bonus system, and an obligation to participate only in low-risk activities in return for permission to conduct consumer-facing business and access to government support in times of need."
"Or they choose the high-risk financial model, but are prohibited from conducting consumer-facing business and are left to sink or swim by the government even if the going gets tough."
Mr Clegg challenged the government for failing to tackle the problems of the economy, claiming Gordon Brown had missed an opportunity in making a cut to VAT.
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