British MPs: Banks “authors of their own demise”
In its second report on the banking crisis the Treasury committee has criticised banks for their reckless behaviour. They have also supported government attempts to repair the banking system and bail out wayward banks.
Chairman of the Committee John McFall noted a “comprehensive failure of the banking system at all levels.” The committee also criticised banks for not allowing new customers to gain access to loans despite have been given billions of money for UK taxpayers.
“The committee deplores the behaviour of a number of those banks who have received so much public money and behaved in such an insensitive manner, particularly to established customers,” Said Mr McFall.”
Many small businesses the Committee spoke to have found it hard to obtain loans without higher charges and fees. Mr McFall said: “There is clearly an unresolved inconsistency between, on the one hand, bankers’ assurances that they are increasing their lending and, on the other hand, widespread and clearly sincere complaints that credit is difficult to obtain and increasingly expensive.”
The British Banking Association (BBA) has accused the Committee of attempting to grab headlines with their statements. Angela Knight, CEO of the Association warned that any further attacks on the banking system could potentially do large amounts of damage the UK’s reputation as a financial sector. They also noted that lending for small and medium enterprises had risen in March for the third consecutive month.
The Committee also pinned some of the responsibility on the supervisory system which includes the government and Bank of England, but the BBA believe the main focus attack on banks was unfair, especially in tarring the reputation of all banks rather than a select few: “The industry acknowledged some time ago that in some banks the risk controls were not good enough. But many banks are in fact weathering this financial crisis and it is unfortunate the Committee has not seen fit to recognise this.”